On the stronger ISM data the odds of a Fed rate cut in May vanished, and June shrank.
Please consider the March 2024 Manufacturing ISM® Report On Business® emphasis mine.
The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee:
The U.S. manufacturing sector expanded in March, as the Manufacturing PMI® registered 50.3 percent, up 2.5 percentage points compared to February’s reading of 47.8 percent. “This is first instance of expansion in 16 months. Two out of five subindexes that directly factor into the Manufacturing PMI® are in expansion territory, up from one in February. The New Orders Index moved into expansion territory after one month of contraction. Of the six biggest manufacturing industries, four (Food, Beverage & Tobacco Products; Fabricated Metal Products; Chemical Products; and Transportation Equipment) registered growth in March,” says Fiore. A reading above 50 percent indicates that the manufacturing sector is generally expanding; below 50 percent indicates that it is generally contracting.
A Manufacturing PMI® above 42.5 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the March Manufacturing PMI® indicates the overall economy grew for the 47th straight month after one month of contraction (April 2020). “The past relationship between the Manufacturing PMI® and the overall economy indicates that the March reading (50.3 percent) corresponds to a change of plus-2.2 percent in real gross domestic product (GDP) on an annualized basis,” says Fiore.
“There’s Still No Rush” to Cut Interest Rates
Meanwhile, Fed Governor Chris Waller says “There’s Still No Rush” to Cut Interest Rates
Interest rate odds reacted slightly to the data.
CME Fedwatch Reaction
The odds of a rate cut in May fell to 0.2 percent, down from 9.3 percent yesterday.
June is more interesting.
The odds of a double cut nearly vanished from 5.2 percent yesterday. The odds of no cut rose to 42.6 percent from 39.6 percent.
Any further good economic news will put the June rate cuts odds under 50 percent.
PMIs going higher!
Why? Improving manufacturing per the MSM.
But in reality it is due to inflation. Why? Input costs were on the rise.
Must be the war industry !
Worldwide demand for all energy types continues to grow, which indicates worldwide economic growth. Oil remains the largest contributor to that energy demand (33% of all energy). And demand for oil keeps growing faster than predicted by some (like the IEA). The US continues to lead the world in oil and natgas production, which is a boost to our economy, particularly as prices have risen recently and we have become a significant exporter. The security of our energy supply (fossil fuel, nuclear and renewables) is attracting investment in manufacturing here vs other countries. This is more important than price, given the uncertainty of supply in today’s environment.
Got oil?
Higher For Longer.
bond yields will push higher through July, at least.
The markets and the economy follow money flows. The upswing ends in June when money flows fall.
The world is being run in reverse:
Banks Are Intermediaries of Loanable Funds | Cato Institute
The Federal Government (and many small businesses many with $15 to 20 minimum wages to content with) has no chance at survival with a 5.25% FED FUNDS rate. Heck, consumers have no chance at survival.
No rush to lower rates? No hurry between now and June, but when the rates do start getting back to 0% and someday, they will forever, it will be fast.
If a business can’t operate profitable at 5.25% its most likely a non viable enterprise. Interest rate suppression has caued this mess. Inflation, class fragmentation where the rich get richer and poor get poorer. The prime beneficiary besides the rich is the govt, inflation erodes the value of the debt. We have a K shaped economy where the upper income earners are doing well but the middle class is suffering. I am thinking we will get stagfaltion, a recession with inflation.
The fraudulent chefs in the kitchen are cooking up a pungent mold and bullshit stew. Open up and swallow it. That’s an ORDER!!! DO IT NOW
Mold, Bullshit and a Big Sprinkling of Gender-Confusion Seasoning, meant to throw us all off as to taste. YUCKY!
It’s a bizzare world where EVERY SINGLE MINOR change, one way or the other, in economic indicators – – – which we can PRUDENTLY say are manipulated just like ALL other narratives – – can be construed as PRO or ANTI-Interest rate Forecasts.
How Politics and The Stock market are then lined up to be identified as CRAPPY or GREAT, depending in the Election Cycle in motion – can create a MYTHICAL advertisement which derails or upholds a President’s hopes of continuing to feed at the Lobby Trough…OR NOT.
And, to top it all off, the STOCK market is NOT the economy no matter what they try to sell us.
Misery abounds, with the realities of unemployment numbers, concocted to report the same person as HOLDING 3 jobs as THREE EMPLOYED, while Homelessness is spreading like a terrible Pandemic, this time for REAL, is making people distrust everything that these authorities cook up.
…van life is so liberating…