Philly Fed Manufacturing Survey Validates Fed Dovish Turn

The Philadelphia Federal Reserve’s manufacturing gauge tumbled this month, bolstering the Fed’s case for easier monetary policy.

The Philadelphia Fed’s manufacturing index fell to 0.3 in June from 16.6 in May. That was the index’s lowest read since February, when it hit zero. The print also came in well below a Dow Jones estimate of 9.3.

Lower prices contributed to the index’s sharp drop, the Philadelphia Fed said. Its current prices received index, which reflects manufacturers’ own prices, plunged by 17 points to 0.6, its lowest level since October 2016.

Manufacturers “suggest weaker regional manufacturing conditions compared with last month,” regional central bank said, noting that new orders, shipments and employment also fell this month.

The Philadelphia Fed’s data comes after the U.S. central bank opened the door to easier monetary policy in the near future. This led investors to price in a 100% probability of lower interest rates in July.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza