Economic data for the week garnered more attention given some high-profile misses. Employment remained strong with non-farm payrolls up 431,000 and the unemployment rate falling to 3.6%.
The ISM Manufacturing Report came in at 57.1, well above 50, but missed expectations of 59.0. More importantly, the new orders component fell sharply from 58.5 to 53.8.
The new orders to inventories ratio, a lead proxy for the Purchasing Managers’ Index in coming months, fell below 1.0 for the first time this cycle.
Inventories have significantly aided the last two GDP reports and declining new orders is getting attention. Despite this, long-end Treasuries sold off and set a new cycle high in yields across all tenors.