Richard Franulovich, the head of FX strategy at Westpac, notes the last week’s U.S. data generally ran counter to bond market expectations for Fed insurance cuts as a robust +263k jobs in April confirms that there is still plenty of sizzle to the U.S. economy.

• Last week also had some cautionary signals, though they were mostly ignored by markets. For example, the April US ISM manufacturing index fell to a 2½ year low, extending a weakening trend in place since August 2018, while the services ISM defied expectations falling to twenty-month lows.
• These diverging signals for the US are increasingly apparent in other leading indicators too.
• Against that the broad sweep of soft US survey data covering manufacturing, services and households points to a weaker profile.
• A notably weaker trend appears to be taking hold, pointing to a period of sub-trend US growth, in stark contrast to the more upbeat signal from US financial conditions.