Manufacturing measures are still top of mind for us today as, while we’ve seen improvement in some regional prints, the U.S.’s Monday slide into contraction means that the world’s five largest economies are now in manufacturing recession. While some, including President Trump, lay blame at the Fed’s feet, trade war anxieties seem to be the main topic of discussion. And that conflict, in addition to the Yuan’s ongoing decline, is certainly having an effect on emerging markets. EM currencies continue to sink and Mexico’s GDP is officially in contraction, registering zero growth in Q2. Finally, as the yield curve inversion deepened in the U.S., the 30-year Treasury yield hit a
new record low. Could the sharp rise in demand for long-term fixed income investments indicate that the markets expect inflation to remain stagnant?
1. As we posted on Monday, the U.S. has entered a manufacturing contraction. The good news is that the Dallas Fed had a nice snap-back and the Richmond Fed fought back to just barely growing, even if the KC Fed was a dismal bust…
![](https://blog.investbcm.com/hubfs/8.28%20chart%209.png)
Source: WSJ Daily Shot, as of 8/27/19
2. And European Manufacturing appears to be stabilizing, but a reading less than 50 is still shrinking.
![](https://blog.investbcm.com/hubfs/8.28%20chart%206.png)
Source: WSJ Daily Shot, as of 8/27/19
3. Will long-term U.S. Treasuries join the $17 trillion of other government bonds that have negative yields?
![](https://blog.investbcm.com/hubfs/8.28%20chart%208.png)
Source: WSJ Daily Shot, as of 8/27/19
4. China continues to let their currency weaken…
![](https://blog.investbcm.com/hubfs/8.28%20chart%205.png)
Source: WSJ Daily Shot, as of 8/27/19
5. The trade war, including China’s unofficial devaluation, is wreaking havoc with other EM currencies.
![](https://blog.investbcm.com/hubfs/8.28%20chart%203.png)
Source: WSJ Daily Shot, as of 8/27/19
6. Our southern neighbor’s GDP entered contraction. How has replacing NAFTA helped them?
![](https://blog.investbcm.com/hubfs/8.28%20chart%204.png)
Source: WSJ Daily Shot, as of 8/27/19
7. Knowledge can be powerful…
![](https://blog.investbcm.com/hubfs/8.28%20chart%201.png)
Source: WSJ, as of 8/27/19
8. Especially in the medical field, where the number of clinical trials in gene therapy has more than tripled since 2015!
![](https://blog.investbcm.com/hubfs/8.19%20reserve%201-1.png)
Source: WSJ, as of 7/28/19