Service sector carrying global growth still/Very interesting rent commentary from CPT

After the heavy economic calendar last week, it quiets down this week but we still get another flood of earnings to go through. As for the overseas data to start the week, the China private sector focused Caixin services PMI for April was 52.5 vs 52.7 in March and that was as forecasted. This part of their economy has certainly outperformed manufacturing. Caixin said "Central to the latest expansion in services activity was another rise in new business...Moreover, the pace of growth was the fastest since May 2023 and solid overall. Panelists attributed the rise in new work to improved demand conditions and a broadening of customer bases on the back of business development efforts." Specifically with exports, more tourists are coming on the easier visa situation with a bunch of countries. 

Hong Kong's April PMI was down a touch to just above 50 at 50.6 vs 50.9 in March. Services too led the way but the overall business outlook still seems tough as "sentiment among Hong Kong SAR (Special Administrative Region) private sector firms remained pessimistic at the start of the 2nd quarter, with firms in the wholesale and retail sector being the most downbeat. Firms cited concerns regarding rising competition and subdued economic conditions affecting sales."

Singapore's PMI fell to 52.6 from 55.7 but "business sentiment improved among Singaporean private sector firms in April. The level of confidence rose to the highest since last November with twice the proportion of panelists anticipating better market conditions and business development efforts to support sales." 

India's service sector, along with manufacturing, continues to shine in the region as it printed 60.8 for April, though down slightly from 61.7 seen in March. 

As I said Friday, if you're looking for global growth of note in the coming years, Asia is where you will most likely find it. Europe will only grow very modestly and hopefully the US can see about 2-2.5% growth sustainably with productivity and labor force growth being the two key determinants. 

Asian stock markets mostly rallied but following the US rally seen Friday. While the yen is giving back Friday's rally, other Asian currencies are rising vs the US dollar. As seen over the past few weeks, we've had the Japanese FX intervention, we've had a joint US, Japan and South Korea FX statement, we've seen intervention and a rate hike from the Bank Indonesia, verbal intervention from Malaysia, and likely a deferred rate cut from South Korea. This, all to stop the Asian currency weakness. Here is a chart of the Bloomberg Asia/Dollar index and we are bouncing again after retesting the lows of November. 

Asia/Dollar FX index

The service sector is also carrying the economic weight in Europe as their PMI was revised up by .4 pts to 53.3 from the initial print seen a few weeks ago. That is up from 51.5 in March and the best read since May 2023 led by Spain and Italy and their tourism industries, both outperforming Germany and France. While the ECB is going to cut in June and we don't know when the Fed will, the drop in US yields last week has the euro nearing a one month high vs the US dollar.