The Purchasing Managers’ Index (PMI) is collected monthly. The person who buys the inputs for their company is asked if he will buy more or less inputs in the next 30 days. A PMI of 50 means the same amount of inputs are expected to be bought in the coming month as the previous month. The purchasing managers index has become a much followed monthly index to measure countries’ economic health.
Yesterday’s USA PMI data was not nearly as negative as expected. The manufacturing PMI was expected to be 51.1, but it actually was 51.8, up from 51.5 in August. Yesterday, that was bad news. Why? Since the US economy was not crashing, but probably expanding, the market concluded the Federal Reserve will continue to raise interest rates at an accelerated pace to retard economic growth. When Jerome Powell, the Fed Chairman said the US economy very well may go into a recession before inflation was brought under control, the dollar index shot straight up (+1.67 for the day) and just about every other price dropped like a rock. The dollar made new 20-year highs again, equities and crude oil tumbled to nine-month lows.
Ag Fundamentals: US central Midwest is dry for active harvest weekend. But that also means no moisture for US waterways with lower Mississippi levels below thresholds needed for barge movement. The open interest changes just for yesterday indicated there was more pre-hedging than we expected.