Chicago Purchasing Manager Report Rises

- The Chicago Purchasing Manager report for June rose to 49.6 versus estimates of 48.0 and a reading of 49.1 in May.

BOTTOM LINE: A measure of US business activity for June unexpectedly rose, Bloomberg reported. Foreign demand for US goods continues to help buffer the manufacturing sector from a more pronounced slowdown. The trade deficit during 1Q was the lowest since 3Q 2002, which contributed .8 percentage point to overall US growth of 1.0%. The New Orders component fell to 52.0 from 56.1 in May. The Employment component of the index rose to 46.7 from 41.2 in May. The Inventory component of the index rose to 50.5 from 42.2 the prior month. The Prices Paid component fell to 85.5 from 87.5 in May. I expect the Chicago PMI to remain around current levels in July. The US dollar is rising .2% and the 10-year yield is gaining 2 basis points to 3.98% on today’s reports. The TED spread is down 11 basis points to 1.02 and the Euro Financial Sector CDS Index is falling 5.4% to 91.11, which are also positives.