“The manufacturing numbers are simply awful”, Phil Smith, Principal Economist at IHS Markit said this morning of the latest PMIs out of Germany. Indeed they were, and even services – which have held up well in the face of the declining manufacturing PMIs – fell substantially. In today’s Macroeconomic Briefing we highlight a contrarian piece from Longview Economics which argues that PMIs in Europe maybe bottoming as the deleveraging cycle in Europe is nearing its end (this is backed up by some solid economic theory). Longview argues that this deleveraging is part of the reason behind the divergence between services and manufacturing. It’s an interesting argument which many market participants may see as something of a stretch given today’s ”awful” PMIs. On other themes, Absolute Strategy Research assess European inflation breakevens and say they are way out of whack with current inflation trends, while Macrolens make the case that permanent low neutral rate must be accepted to save capitalism. Finally, MI2 Partners provide an insiders perspective on the US repo crisis from a head of fixed income at a leading US money centre bank, which gives a much more objective assessment of the many moving parts that have contributed to the current repo dysfunction. Don’t expect this situation to just go away anytime soon, they warn.