S&P Global released their flash purchasing managers index this morning and it is an interesting read – a mixed bag to some degree.
Category: Economic News
Chicago PMI Comes in Hot
In the never ending story of contrasting economic signals the Chicago Purchasing Managers Index came in hotter than expected.
The index came in at 44.9 versus expectations of 40 and last months reading of 37.2. Of course nothing moves in a straight line and the readings in the last year have been kind of ugly–but ‘ugly’ numbers haven’t translated much into weakening jobs numbers.
CPI Comes In Soft
After waiting for a few months we finally get some directionally favorable inflation news. Markets are flying.
Inflation came at 7.7% year over year–below the 7.9% expectation. The core month over month change came at .3% versus versus .5% expected.
Equities are partying hard–up 2.7%. The 10 year treasury is at 3.95%–seems like we will see a decent rally today in preferreds and baby bonds today.
So we get 1 ‘vote’ for a reduced Fed Funds rate hike in December –but it is just one piece of data and much more is to be seen in the next 30 days leading up to the FOMC meeting.
Hot, Hot, Hot
Well all the whining about the economy is slowing rapidly and the Fed needs to back off is all meaningless with the release of hot CPI numbers just now.
The rally in markets instantly turned down–so about a 700 Dow point swing (from 300 up to 400 down). Interest rates (10 year treasury) has turned higher and now is at 3.99% and the 2 year is up 15 basis points at 4.44%.
So now we know for 99% certainty–75 basis points on 11/2.
No Relief in PPI
75 basis point rate hike is still on tap for 11/2/2022. PPI gives no relief.
The PPI (producer price index) was just released–generally speaking the various actuals matched forecasts, although the PPI final demand was double forecast (.4% versus .2% forecast).
Equities have fallen off their early gains to now be flat, while the 10 year treasury barely budged and standing at 3.96%, waiting for the all important CPI (consumer price index) tomorrow.
At 1 pm (central) we have the release of the FOMC minutes for last months meeting and while this is very old news markets probably will react. Additionally we will have 3 Fed folks speaking today–it is expected they will all have a hawkish tone.
I plan no activity today–just waiting and watching.