July 01, 2022 14:35 GMT
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- The ISM manufacturing index was weaker than expected in June, falling from 56.1 to 53.0 (cons 54.5).
- New orders (49.2) joined employment (47.3) with a sub-50 readings for lows since May’20 and Aug’20.
- The report was more positive on employment than the numbers suggest: “despite the employment index contracting in May and June, companies improved their progress on addressing moderate-term labor shortages at all tiers of the supply chain… panelists saw lower rates of quits compared to May.”
- But new orders in contraction territory clearly dominate. Some respondents note a pushing back of customer orders on high inventories or material availability holding back production, but it’s not all bad with some customers pulling forward orders to offset it and ocean freight costs beginning to fall a bit.
- Electrical components have now been in short supply for 21 consecutive months, semiconductors 19mths.
- The rally in yields continues at pace, with 5Y yields sliding 9bps on the release for 25bps lower on the day as the dollar surges with BBDXY +0.7%.