Global Manufacturing PMI: Sluggish Growth Points To Lower Returns

The October global manufacturing PMI printed at 49.4, up from 48.7 in September but still in contractionary territory. While output stabilized at 50.1, new orders (48.8) and new export orders (48.3) remain in contraction, as is the case for the new orders-to-inventories spread.

This rebound is in line with recent soft data showing that the global manufacturing cycle is still contracting, but at a lesser speed. While positive at the margin, this still paints a worrying picture given risk assets are richly valued.

Macro momentum points to much lower future returns for equities vs. bonds, after their massive outperformance led by US equities. The US election brings considerable uncertainty for the rest of the world, as a Trump victory would translate into trade tariffs and a headwind for global growth.