The ongoing demise of the “synchronised global growth” narrative – which started showing up in macroeconomic data disappointments world-wide over a month ago – is beginning to become evident in capital markets as Nomura's Charlie McElligott points out that risk-asset weakness (and fixed income strength) hints at a growth peak and investor narratives shifting to a developing-acknowledgement that “the best may be behind us.”

This perspective echoes SocGen's view that “the growth spurt is now behind us” as China's credit impulse fades.

Via Nomura's Charlie McElligott

Punchline – Risk assets are getting heavy (SPX -3.1% over past three sessions; WTI -4.4%; Copper -3.5%;  EMFX -1.1% all over same period, with NKY -1.6% and DAX -1.7% overnight)while USD and US rates continue to “pain trade” squeeze higher, as a fresh trough of data shows the global growth narrative in danger of shifting lower (“still expansive but slowing”).  Effectively, the “synchronized global growth” story is now beginning to be questioned by investors who are now open to the “evolved” idea we've been discussing recently–that “the best is now behind us,” as financial conditions continue their nascent “tightening.”

Overnight, we saw broad EZ and country-level Mfg PMIs falling from their peaks made in Dec / Jan.  Week-to-date, we have now seen misses too with China Mfg PMI (both imports and new export orders saw outright CONTRACTION sub-50), slowing China Non-Manu PMI (contractions in selling prices, employment, new export orders and work backlogs), Japan retail Sales (largest decline since Jan '16) and Japan Industrial Production (largest drop since the tsunami in '11).  And despite the positives of recent US inflation-, wage- and labor- data, we are too seeing a “slowing,” with four consecutive “misses” the past few days in Durable Goods, Wholesale Inventories, Pending Home Sales and Chicago PMI.