US PMI up; big 3 PMI falls in September

In September, the preliminary US PMIs for both services and manufacturing rose a little.  The average for them both is shown below.  This is the first time, month on month, that they've risen in over a year.  Is this the end of the slowdown?  Perhaps, though I would have said it's a few months too soon based on both my leading and my longer-leading US indices.  Perhaps it is the end of the decline in the PMIs, but not yet the beginning of a sustained rise.

The "flash" manufacturing PMIs for both Europe and Japan fell (there isn't a preliminary estimate made for China, and its PMIs for September will only be out early next month) .  So the weighted average for the big three declined again.

This divergence between the US and Europe will have implications for markets.

• The Fed seems to me unlikely to cut the fed funds rate again.  They will wait to see whether the cuts already made have their effect.  This easing cycle, for the time being, is ended.
• Since because of Germany's intransigence, Europe can't do the obvious—increase deficit spending to turn the economy around—the ECB will be obliged to turn to QE (quantitative easing) which is a fancy term for saying that the ECB will buy bonds with "printed" money, to drive down bond yields.  However, as bond yields in Germany, France and The Netherlands are already negative, and they're sub 1% in the rest of Europe, this is unlikely to make any difference.  Except .... to the exchange rate.  Expect the Euro to keep on weakening, and watch for Trump's trade wars to spread to Europe as that happens.
• Expect in contrast the US$ to keep on rising.
• Thus already anaemic share markets in Europe will look even worse in US$ terms.  The US share market will remain the most attractive of all developed markets (in US$)
• US bond yields have prolly troughed for the time being.  Europe's prolly haven't.  The spread between the two regions will widen.
• Commodity prices on average will prolly continue to slide, though supply/demand considerations in some commodities will make them exceptions.  If China begins a sustained recovery, then commods will bottom.  Until then, be cautious.