Chicago PMI surprises higher and a word on the twist
The July Chicago PMI rose 0.8 to 53.7. Most were looking for a number closer to 52.4. Production fell 2.5 to 54.5, new orders rose 1.0 to 52.9, backlog surged 10.6 to 52.8, and employment eased 7.1 to 53.3. The Chicago PMI has the second highest correlation to the ISM manufacturing index of the regional indices. Regional numbers have been extremely mixed. The Milwaukee number is yet to be released, but so far four surveys have expanded and two have contracted. Dallas and Richmond, which have two of the three strongest correlations to the ISM manufacturing surveys, fell sharply down 16 to -17 and 13.2 to -19 respectively. The increases have been less dramatically.
The mix of regional surveys does not make the Fed's job any easier as the picture on manufacturing growth is uneven. Keep an eye on the the Fed's maturity extension announcement today at 2:00 ET. The Fed will be detailing its purchase and sale dates. Given the FOMC meeting, traders may try to read into the details of the announcement. In July, the Fed said it would purchase $45 bln in treasuries and sell $39 bln in treasuries. The Desk was projected to redeem about $20 bln in treasuries.
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The mix of regional surveys does not make the Fed's job any easier as the picture on manufacturing growth is uneven. Keep an eye on the the Fed's maturity extension announcement today at 2:00 ET. The Fed will be detailing its purchase and sale dates. Given the FOMC meeting, traders may try to read into the details of the announcement. In July, the Fed said it would purchase $45 bln in treasuries and sell $39 bln in treasuries. The Desk was projected to redeem about $20 bln in treasuries.
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*Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.
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