ME News reports that on August 3 (UTC+8), data from the U.S. Institute for Supply Management (ISM) showed that the U.S. manufacturing PMI for July rose to 55.6, the highest level since May 2022, marking the seventh consecutive month of expansion. The data revealed that the U.S. manufacturing production index climbed to 58.5 in July, the highest level since the end of 2021, with new orders maintaining strong growth and manufacturing employment rising for the first time since September last year, indicating increased business confidence in the economic outlook. However, behind the manufacturing recovery, inflationary pressures and bond market risks continue to intensify. Repeated tensions in the Middle East have pushed oil prices higher, putting pressure on supply chains and raw material costs. Although the manufacturing prices index fell to 71.1 in July—the lowest in five months—it remains at a high level. The combination of strong economic data and inflation concerns has led to significant volatility in the U.S. bond market recently. Mark Cabana, Head of U.S. Interest Rate Strategy at Bank of America, stated that current bond market fluctuations represent a “textbook inflation credibility shock,” as markets worry about insufficient communication from the Federal Reserve. Cabana noted that Federal Reserve Chair Kevin Warsh has failed to clearly articulate a specific path to achieving the 2% inflation target, and the termination of the long-used “forward guidance” strategy has plunged markets into uncertainty. Data shows that the term premium on 30-year U.S. Treasuries has risen to 1.51%, the highest level since 2013, with the yield on 30-year Treasuries briefly reaching 5.28% last Friday. Bank of America believes the Fed must rebuild market confidence through its September interest rate decision; otherwise, pressure on the U.S. bond market may further escalate. (Source: BlockBeats)
US Manufacturing PMI Reaches Four-Year High as Bond Market Faces 'Credibility Blind Spot'
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Summary
Liquidity and crypto markets saw renewed interest as the U.S. manufacturing PMI reached 55.6 in July, the highest since May 2022. Production, new orders, and employment all rose sharply. Meanwhile, 30-year Treasury yields climbed to 5.28%, signaling continued stress in the bond market. With CFT regulations tightening and oil prices rising, analysts say the Fed must act to avoid a credibility crisis.
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