Global Macro Picture Set for Shakeup as China PMIs, BOJ, and US Payrolls Drive Rate Expectations

This week's global macroeconomic picture is set to be shaped by several key events. On Tuesday, China will release its September Manufacturing, Non-Manufacturing and Composite PMIs. The PMI for manufacturing stood at 49.8 in August, while the non-manufacturing business activity index fell to 49.0 and the composite output index registered 49.5.

A return to expansion alongside stronger new orders would support the yuan, industrial metals, and Chinese equities. However, another set of sub-50 readings would reinforce expectations for additional policy support.

On Wednesday, the Bank of Japan will release its September Meeting Summary of Opinions and Q3 Tankan Survey. The BOJ raised its policy rate to 1.25% at its September meeting, and policymakers' views on inflation, the yen, and further tightening will be revealed.

The Tankan survey will update business sentiment, capital-spending plans, pricing expectations, and exchange-rate assumptions. Firm corporate sentiment and hawkish policy views would lift Japanese government bond yields and support the yen, while greater concern about growth would weaken expectations for consecutive rate increases.