The report highlighted widening divergence between manufacturing and services.
On May 23, S&P Global released the flash readings of PMI reports for May. Manufacturing PMI declined from 50.2 in April to 48.5 in May, compared to analyst consensus of 50. Numbers below 50 show contraction.
Services PMI increased from 53.6 to 55.1, compared to analyst consensus of 52.6. Composite PMI improved from 53.4 in April to 54.5 in May due to the strong performance of the services segment.
S&P Global commented: “The rise in output was the sharpest since April 2022, but led by service providers, who reported stronger demand conditions.”
Treasury yields continued to move higher after the release of PMI reports. The better-than-expected Composite PMI and debt ceiling uncertainty served as bullish catalysts for Treasury yields.
U.S. Dollar Index settled near the 103.50 level as traders focused on rising Treasury yields. Bond traders are worried that U.S. will not raise the debt ceiling before June 1, which is bearish for U.S. government bonds and bullish for yields.
Gold is trading near the $1965 level. Stronger dollar and higher yields put pressure on gold markets.
SP500 rebounded from session lows after the release of PMI reports. It remains to be seen whether this rebound will be sustainable as traders may stay focused on debt ceiling negotiations.
For a look at all of today’s economic events, check out our economic calendar.
Vladimir is an independent trader, with over 18 years of experience in the financial markets. His expertise spans a wide range of instruments like stocks, futures, forex, indices, and commodities, forecasting both long-term and short-term market movements.