Chicago PMI Exceeds Expectations at 43.8, Signaling Continued Contraction

October Chicago PMI Data

• 📊 The Chicago PMI for October was reported at 43.8, surpassing the expected 42.5.
• 📈 This figure represents an improvement from the previous month's reading of 40.6 and is the best performance since July.

Economic Contraction Persists

• ⚠️ Despite the improvement, the Chicago PMI has remained in contraction territory (below 50) for 23 consecutive months.
• 🗓️ The last time the index was in expansion (above 50) was in November of the previous year.

Market Reaction and Interest Rates

• 📉 The 10-year Treasury yield is down two basis points on the day but up eight basis points on the week, currently at 4.08.
• 📈 The two-year Treasury yield is up 11 basis points on the week, with both maturities showing higher yields than before the September Fed rate cut.
• 💡 A key takeaway is that the market does not necessarily follow the Federal Reserve's actions on rate cuts.