US purchasing managers’ indices (PMIs) have been sliding since August 2018, albeit from elevated levels. After reaching a cyclical peak in September 2017, manufacturing PMI readings went sideways for a year before they started a downtrend. The latest reading has kept that downtrend intact.
US manufacturing activity slowed in April to a rate last seen in October 2016. According to the Institute of Supply Management (ISM) April survey, its Purchasing Managers Index recorded a reading of 52.8, down from March’s reading of 55.3 and below the market’s expected figure of 55.0.
The average reading since 1948 is 52.9, so the current reading is just below the long-term average. However, strong ADP figures were also released on the same day and they may have counteracted any negative assessments of the ISM figures.
US bond yields finished the day higher at the short end and lower at the long end while market expectations of a rate cut were wound back. 2-year Treasury bond yields finished 5bps higher at 2.31%, the 10-year yield remained unchanged at 2.50% but 30-year yields were 3bps lower at 2.90%. The probability of a December rate cut implied by federal funds futures slipped a little further away from the heights reached at the beginning of May to finish the day at 61%.
US bond yields finished the day higher at the short end and lower at the long end while market expectations of a rate cut were wound back. 2-year Treasury bond yields finished 5bps higher at 2.31%, the 10-year yield remained unchanged at 2.50% but 30-year yields were 3bps lower at 2.90%. The probability of a December rate cut implied by federal funds futures slipped a little further away from the heights reached at the beginning of May to finish the day at 61%.