US Manufacturing: A Long Weekend for Growth, but a Quick Pick‑up on Employment
Folks, the ISM manufacturing PMI slipped to 48.7 – below the market’s hopeful expectation of a near‑indicated reading. Think of it as a mild breeze at the start of a steamy summer afternoon: it’s not the blaze we were expecting!
What the Numbers Tell Us
- Employment – The bright spot: 51.1. Hiring’s still steady – the good news for job seekers.
- New Orders – The single most painful bite: 45.4, the fiercest dip since May 2023.
- Production – Down to 50.2, the lowest since February. Let’s call that a “slow‑motion” decline.
Economist’s Response: The Fed and GDP Talk
The Atlanta Fed’s Q2 GDP Nowcast dropped to a run rate of 1.846% from 2.66%. That’s a solid “C” grade on the economy’s progress report.
Impact on the Yield Curve
US Treasury’s reaction was clear: the 10‑year yield slipped from 4.45% to 4.39% and is eyeing a re‑test of the 200‑day moving average at 4.34%. In the 5‑to‑30‑year stretch, yields are floating 10–11 bp lower, which signals a solid rally in the session and tells traders that the market isn’t feeling a “sell‑off” vibe.
Meanwhile, the 2‑year Treasury settled at 4.81% – up 6 bp – and swaps are looking for an extra 3 bp cut at December’s FOMC, with 39 bp owed by year‑end.
Currency & Commodity Highlights
- USD Index: Fell 0.6% and is testing 104. Watch as it struggles for a breakout.
- EURUSD: Crooked past the 1.0880 supply zone, aiming above 1.0900.
- Action: USDJPY seeks to jack the 156 round number. A drop below may herald a 154.05 support.
- Mexican Peso: +4% decline due to fear of a mega‑Madero Party. Investors are double‑checking the USD/MXN pair.
- Gold: Climbed to $2354, with a hopeful push toward $2364.
- Domain: Oil’s WTI plunged from $77.20 to $76.15, a -3.6% fall; Brent fell -3.7%.
Equity Action – Tech, Healthcare, Energy, the E‑Shop (GameStop)
- S&P500 bounced back from 5234 lows to a final close of 5283.
- On the Tech front, Nvidia, Meta and Apple pushed the needle – with Nvidia rocking a +4.9% climb at $1150.
- Energy ticked -2.6%, giving a soft slap that trickled into Asian energy stocks.
- GameStop rode the twitter bubble: started at $40.50 but closed near $28.16, after a burst of hype and a wave of speculation about the “Morgan Stanley of Reddit”.
Asia’s Outlook – A Quiet Monday (Maybe)
- ASX200 -0.1%, HK50 -0.6%, NKY225 -0.6%.
- Upcoming data: China’s Caixin PMI (11:45 AEST) and Australia’s partial Q1 GDP figures (exports, inventories, balance of payments).
Bottom line: The manufacturing dreck tells us the economy’s tent has a few leaks, but job creation is still holding. Corporate markets are reacting like a toddler at a birthday cake – some nibble, some try to steal the whole thing. Keep your eyes on the 10‑year yield, and you’ll spot the next pivot.
