It looks like summer began on a positive note, at least in the manufacturing sector. From the Associated Press (via Fox News):
The U.S. manufacturing sector expanded at a faster-than-expected pace in June, as new orders to factories picked up, a private research group reported Friday.
Activity at the nation's factories increased for a 25th consecutive month, according to figures from the Institute for Supply Management (search). The June upturn followed six consecutive months of slowing growth in the sector, the group said.
ISM's manufacturing index registered 53.8 percent in June, up from a reading of 51.4 in May. The new reading was notably higher than the 51.5 figure forecast by analysts.
A reading of 50 or above in the index means the manufacturing sector is expanding. A figure below 50 represents a contraction.
"These are the most positive signs that we have seen in several months, and they indicate that we may be through the 'soft patch' that many observers touted," said Norbert J. Ore, chair of ISM's manufacturing business survey committee.
The most encouraging part of the report was how broad-based the gains were:
Of the 20 industry sectors tracked by the group's survey, 13 reported growth in June, including petroleum, textiles, food, wood and wood products, furniture, instruments and photographic equipment, industrial and commercial equipment and computers, rubber and plastic products, chemicals, electronic components and equipment, printing and publishing and primary metals.
As noted at the Capital Spectator, the news seems to have caused bond market players to consider anew the outcome of Thursday's Federal Reserve interest rate decison. This is from Bloomberg:
U.S. 10-year Treasury notes fell for the third day in four on speculation yields below 4 percent don't reflect expectations the Federal Reserve will continue to increase interest rates this year.
The Fed raised its benchmark rate a quarter point to 3.25 percent yesterday and kept a plan for additional increases at a "measured'' pace. Treasuries rallied yesterday in response to the Fed's statement that longer-term inflation pressures were "well contained,'' shrinking the gap between 10-year yields and the Fed's rate to the smallest in more than four years...
"The Fed was reasonably upbeat about the economy and we're expecting another increase next month and another in September,'' said Daniel Pfaendler, head of interest-rate strategy in Frankfurt at Dresdner Kleinwort Wasserstein. "Right now we see an upside risk to yields in the U.S.''
UPDATE: With respect to the reporting on those market reactions, Chris Dillow has warning for you.