US S&P Global PMI Data Looms: Inflation, Oil Surge, and Fed Hike Bets Drive Market Volatility
US S&P Global PMI data drops Friday, signaling business health. While expansion is expected, surging oil prices and Middle East tensions could reignite inflation fears. This report holds critical weight for Fed policy and market direction.
The US S&P Global PMI data is due Friday, offering an early read on the nation's economic health. Analysts anticipate a slight dip in Services PMI to 51.0 and a rise in Manufacturing PMI to 54.5, with both figures remaining in expansion territory above 50.
Beyond headline numbers, the critical focus is on employment and input inflation comments. This comes as oil prices have surged nearly 30% in July, driven by escalating geopolitical tensions in the Middle East.
This oil price shock complicates the Federal Reserve's path. While softer June inflation data eased immediate hike bets, the CME FedWatch Tool now shows an 80% probability of at least a 25 basis point Fed rate hike by September.
Rabobank analysts caution that these early July PMI signals might not fully capture the latest geopolitical and commodity market shifts. The survey period could understate the true impact of recent oil price increases and Middle East developments.
Any indication of increasing input costs being passed to consumers will signal resurfacing inflationary pressures. This scenario would likely strengthen the US Dollar and reinforce a hawkish Fed stance, impacting broader markets.