Official PMI Prints in Focus

China official PMIs are on tap for May today. The market expects the manufacturing PMI to rise to 49.0 from 47.4 in April, while non-manufacturing is expected at 45.5 from 41.9.

• There is a wide range of forecasts in terms of the economist estimates from the Bloomberg survey. For the manufacturing PMI, the low estimate is 46.0, versus a high of 52.0. Likewise for the non-manufacturing PMI, 42.0 to 51.2.
• Any reading for the manufacturing close to or above the 50.0 expansion/contraction line, would clearly be seen as a positive given the recent downside surprises and revisions to China growth. Shanghai port activity recovered meaningfully in the month.
• It may be a stretch to see this for the non-manufacturing side given restrictions have only been meaningfully eased recently, which presumably has remained a headwind to the services sector.
• If we see downside surprises in the PMI prints, it should take some of the shine off the recent CNH rebound, while we will also watch China bond yields, which have recovered modestly following last week's down move.