Chicago PMI in Steep Contraction Plunging to Worst Reading in 4.5 Years

Mike “Mish” Shedlock's Sitka Pacific Capital Management,Llc

The Chicago PMI went into contraction last month and took a dive to 44.4 in July. Readings below 50 are negative.

Economists expected a rise back into positive territory this month but ISM Chicago notes the Chicago Business Barometer™ Softens to 44.4 in July.

Key Points

Four of the five components were in contraction territory this month, with only Supplier Deliveries above 50. The weakness in the Barometer observed in Q2 continued into the current quarter, with the latest outturn making it the weakest start to Q3 since 2009.
The Production indicator fell 22% on the month to hit a 10-year low. Demand remained muted, highlighted by the New Orders indicator that subsided further into contraction.
Weaker demand and production led firms to adjust their workforce. The Employment indicator fell into contraction for the first time since October 2017 and hit the lowest level since October 2009.
Two in five firms expected the economy to see slower growth than currently, with some holding tariffs responsible for the slowdown. The majority, at 46%, did not expect any change while only 14% expected the economy pick up.

No Panic Yet

Don't worry, ISM Chicago says "Firms are not panicking yet, but the latest report isn’t adding to the cheer."

Author

Mike “Mish” Shedlock's

Sitka Pacific Capital Management,Llc

Mike “Mish” Shedlock is a registered investment advisor for SitkaPacific Capital Management.

GBP/USD softens to near 1.3550 on geopolitical tensions, hawkish Fed bets

The GBP/USD pair trades with mild losses around 1.3550 during the early Asian trading hours. The US Dollar edges higher against the British Pound amid ongoing Middle East tensions and Federal Reserve Chair Kevin Warsh's hawkish remarks at the Jackson Hole symposium.

EUR/USD struggles near 1.1600; looks to Eurozone HICP for some impetus

The EUR/USD pair struggles to capitalize on the overnight bounce from the 100-day SMA, near the 1.1575-1.1580 region, or a one-and-a-half-week low, and drifts lower during the Asian session on Tuesday. Spot prices currently trade around the 1.1600 mark, down nearly 0.10% for the day, amid modest US Dollar strength as traders now look to the preliminary reading of the Eurozone Harmonized Index of Consumer Prices (HICP).

Gold: Defending $4,400 is critical for buyers

Gold fades Monday’s rebound from eight-day lows, reverting toward $4,400 early Tuesday. US Dollar bounces sharply amid US-Iran tensions-led risk aversion and hawkish Fed bets. Gold attacks 21-day SMA near $4,400 after defending it on Monday; RSI still bullish.

Ripple, Cardano, and Dogecoin show weakness – Crucial EMAs in focus

Ripple, Cardano, and Dogecoin remain weak after double-digit losses last week, testing their crucial Exponential Moving Averages for immediate support. The technical outlook warns of further weakness in the prices of XRP, ADA, and DOGE as bullish momentum eases.

Fed Chair Warsh runs open-mouth operations at Jackson Hole but can he deliver?

Federal Reserve Chairman Kevin Warsh moved markets on Friday with his Jackson Hole speech, even though the central bank has yet to do anything to move inflation. Clearly, Warsh wants to convey a message. He’s tough on inflation, and the Fed will “deliver price stability.”

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.