US: Correction in the strong confidence gauges may have finally commenced - Westpac

In view of the analysts at Westpac, the weaker May NY Fed Empire survey suggests that a correction in the strong US confidence gauges may have finally commenced.

Key Quotes

“Philly Fed (Thu 18 May), Richmond Fed (Tue 23 Mar) and Markit’s PMI (Wed 24 May) are the next key surveys to watch. Weaker reads will raise the prospect of an ISM manufacturing survey that skids toward 50.”

“Animal spirits unleashed by Trump / strong outperformance in the “soft data” has long been overdue a correction. Simultaneously Washington risks are tilting in less market friendly direction - the deepening “Russia-gate” scandal raises already elevated political/congressional obstacles to passage of Trump’s reflationary policies yet further, both as an all-consuming distraction and by reducing the President’s political capital/support in Congress.”