NATGAS: China Plans for Natgas Heating Season: Kpler

FRBNY EFFR for prior session:

• Daily Effective Fed Funds Rate: 4.09% (+0.00), volume: $95B
• Daily Overnight Bank Funding Rate: 4.09% (+0.00), volume: $188B

• MNI: BELGIUM SEP BNB BUSINESS CONFIDENCE -7.9

• Contrasting September trends in the services readings of the German IFO Business Climate and PMI indices poses the question of the underlying drivers of the difference. Remember that this month, the IFO services sector balance declined from 2.6 points to -3.0, while the flash services PMI improved from 49.3 to 52.5. Both releases are seasonally adjusted.
• The IFO methodology reads "companies are asked to give their assessments of the current business situation and their expectations for the next six months [...] The balance value of the current business situation is the difference in the percentage shares of the responses “good” and “poor”; the balance value of expectations is the difference in the percentage shares of the responses “more favorable” and “less favorable.” The business climate is a transformed mean of the balances of the business situation and the expectations".
• The PMI methodology meanwhile reads "The Services Business Activity Index is [...] based on the survey question “Is the level of business activity at your company higher, the same or lower than one month ago?”
• As such, the IFO headline index will be more forward-looking as the expectations component is flowing into it, contrary to the PMI. Comparing the PMI against the current assessment component of the IFO (see chart below) yields some solid correlation. Even here, the respective question framing suggests the PMI is probably a little bit more backward looking than the IFO - that may mean the PMI is more representative than the IFO of what actually happened.
• Having said this, also the IFO services current assessment declined this month (again, as opposed to the PMI), printing 7.4 after 11.4 in August (lowest since November 2024). This may have been a one-off at least to some extent looking at the historical comparison of the series.