
Exactly according to plan
Manufacturing “unexpectedly” falls, experts blame cold winter.
U.S. stocks are sliding and yields are plummeting as Treasuries surge following the release of much worse than expected manufacturing survey data from the Institute of Supply Management.
The headline index from the ISM report tumbled to 51.3 from December’s 56.5 reading, indicative of a sharp slowdown in American manufacturing in January. The consensus Wall Street estimate called for a much smaller decline to 56.0.
In the wake of the release, the S&P 500 is trading 2.3% lower at 1742, while the yield on the 10-year Treasury note is 2.59%, 5 basis points below Friday’s close. Gold is up 1.5%, trading at $1259 an ounce.
The big news overnight and this morning has been the steady stream of purchasing managers index survey data releases from the world’s largest economies. Growth in China’s services sector is slowing, while growth in the eurozone’s manufacturing sector is accelerating, and growth in America’s manufacturing sector is slowing.
In recent weeks, economic data releases have been disappointing relative to Wall Street’s consensus forecasts. A widely-followed measure of this — Citi’s economic surprise index — has taken a sharp turn lower.
ISM and others have cited unseasonably cold weather this winter as a reason for the spate of weakness.
Of course, there are those who see a shutdown of factories as a good thing ….