The Escalating Battle for Liquidity
PMIs Show Slowing Economic Growth
There was a significant amount of economic data released this week, with particular attention given to the PMI data, which is considered a reliable indicator of economic activity. In May, the manufacturing sector in the US experienced its seventh consecutive month of contraction, as indicated by the Manufacturing ISM Report. The Manufacturing PMI for May was recorded at 46.9, a data point that suggests a recessionary environment.
The report highlights the challenges faced by the manufacturing sector, including a decline in new orders, low backlogs, and uncertainty regarding future demand. However, there were positive signs observed in terms of production and employment. Notably, the report also indicated a decrease in the prices paid for goods by survey participants (deflationary).
Our view is that lower PMIs are downstream of tighter liquidity conditions, hence why we pay much more attention to monetary and fiscal policy as opposed to pure economic activity. However, we thought it would be useful to investigate Bitcoin’s relationship with PMI more closely.
We mapped out the historical PMI figures since 2011, coinciding with the inception of bitcoin trading on centralized exchanges. We have also marked the cyclical peaks and troughs of the PM...Unlock this article by joining our Community!
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