- Current uptrend in ISM Mfg index since the bottom at 32.5 in Dec08 is very evident.
- [Reuters chart not updated. Latest data for Apr10 at 60.4 is marked by the horizontal pink line]
- My data only goes back to the year 2000. The high within this period was 61.4 for May04 (data released Jun04); we are now within touching distance of this.
- Recap recent Fed Funds changes : 1. The last of the post-9/11 rate cuts to 1.00% was made in Jun2003 (entire cycle started in 03Jan01, with cut from 6.50% cut to 6.00%). 2. First rate hike of the next cycle was in Jun04 to 1.25%, to a peak of 5.25% in Jun06. 3. New cycle of cuts started in Sep07, down to current 0-0.25% set in Dec08. (See chart here).
- Date of start of the previous rate hike cycle = 30Jun04, not long after the peak ISM number for May04 was released. Pure coincidence?
- To me, carry trades (both Rates and FX) founded on "extended period" assumptions are fast getting into danger territory.
- Not too bothered when the Fed actually starts tightening. More relevant is when the market snaps and do the Fed's job for them. Long ED Spreads and USD/JPY best positioning vehicles.
04 May 2010
US ISM Manufacturing : 60.4 for Apr10
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