Thread by @Trinhnomics

Good morning 🍁- non-manufacturing ISM slows to 52.6 from 56.4 w/ new orders/employment decelerating while new export orders EXPANDED! Prices are rising.

Markets were sad & then excited that maybe & increasingly more likely that we'd get help from JPO et al ✂️✂️

Question: Where are we?

We are here 👇🏻👇🏻👇🏻 - a slowdown for both services and manufacturing (contraction).

In Asia, the US coming to earth w/ the rest of the world is likely to be viewed favorably as it SOFTENS THE USD, which has been tightening financial conditions in Asia.

In India, the Philippines, and Indonesia, we see significant slowdown despite limited exposure to trade due to impact of tightening USD liquidity. Capital flows have ebbed, reducing support for these current current account deficit economies.

If the Fed cuts more, EM'll rejoice!

Today, we got the Philippines CPI, which will slow to ~1% level due to a favorable base & weak growth (they tightened a lot in 2018 & impact still felt).

The slowdown of inflationary pressure will allow space for the central bank to cut rates further to help lower real rates 🇵🇭

Finally, we got the RBI decision at HKT215pm & markets widely expect a 25bps cut to take rates from 5.4% to 5.15%. They should cut 40bps to take it to 5% as CPI is 3.2% & real rates high too.

Let's look at consensus. No one thinks it'll hold & most 25bps but a few calls 40bps🇮🇳

The weak US non-ISM will give space for the RBI to take a bold move as risks of the US being exceptionally strong vs EM is becoming less of an issue. Fiscal cut was bold & monetary likely so too!

Non-farm payroll tonight at 830pm & markets expect 145k. Eyes on wage growth 👇🏻👇🏻.

Philippines September CPI is sub 1% at 0.9%YoY & so real rates at 310bps & that means the BSP will continue w/ its rate cut & RRR cut to help with soggy growth momentum.

✂️✂️✂️🕊️🕊️🕊️