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Empire Survey Sees Broad-based Weakness

  • The Empire State mfg survey was much weaker than expected in May as it fell from 24.6 to -11.6 (cons 15.0) , the first of the main business surveys for the month.
  • Some let up in price components, with the prices paid measure off record high readings from April but still elevated and the prices received reading also nudging lower, but both continue to signal ongoing substantial increases in both input and output costs.
  • This makes for a difficult business environment: "New orders declined, and shipments fell at the fastest pace since early in the pandemic. Delivery times continued to lengthen, and inventories expanded." The outlook for future business was little changed but capex intentions fell to the lowest in several months.
  • Front-end Tsy yields sit at 2.568% just over 1bp lower since the release having also moved lower just beforehand, back to overnight session lows. More restrained pullback in FOMC-dated Fed Funds pricing compared to today’s levels but still see a trimmed in cumulative hikes over the next two meetings to 101bps from 103bps prior to the data.

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