September is historically one of the weakest months of the year seasonally, and it appears that another seasonal correction may be getting underway in earnest. Flash PMI from overseas was mixed overnight. Although China’s headline number was okay, the street latched on to employment and inflation components that were falling faster to keep the pressure on China sensitive markets like the Hang Seng and S&P/ASX. Downward momentum in stocks has continued into European and North American index trading this morning. Major European indices are down 1-2% on the day so far. European PMI numbers were mixed but a bit soft on balance. US markets are heading lower into today’s US flash manufacturing PMI report which may give an early signal if US economic momentum has carried into September. Stocks appear to finally be coming around to the potential for a more hawkish Fed going forward that the USD rally has been signalling for months. When huge iPhone sales out of Apple can’t push stocks higher as happened yesterday, it’s a sign that stocks look fully priced at the moment, and vulnerable to a correction regardless of the excuse of the day. Interestingly, USD is also dropping back a bit in what looks like a normal trading correction. USD’s big rally has left it highly overbought technically against many other currencies as well as commodities, so some backing and filling along the way is to be expected. Gold is taking advantage of the pause, rallying $10.00 on the day so far. European currencies like CHF SEK and EUR are among the top performers while resource currencies are dragging behind, particularly CAD which has been knocked down by a weaker than expected Canadian retail sales report. Economic News Economic reports released overnight and this morning include: Canada retail sales street 0.5% vs previous 1.1% Canada retail ex auto street 0.0% vs previous 1.5% China flash manufacturing PMI 50.5 vs street 50.0 France flash manufacturing PMI 48.8 vs street 47.0 France flash service PMI 49.4 vs street 50.1 Germany flash manufacturing PMI 50.3 vs street 51.2 Germany flash service PMI 55.4 vs street 54.6 Eurozone flash manufacturing PMI 50.5 vs street 50.6 Eurozone flash service PMI 52.8 vs street 53.0 France GDP update 0.1% as expected UK house purchase loans 41.5K vs street 42.9K Hungary interest rate decision 2.10% no change as expected Singapore consumer prices 0.9% vs street 1.1% Economic reports due later today include: 9:00 am EDT US house prices street 0.5% 9:45 am EDT US flash manufacturing PMI street 58.0 10:00 am EDT US Richmond Fed street 10 vs previous 12 FOMC members Bullard, Powell, George and Kocherlakota speaking through the day.