US manufacturers report that things are growing
US manufacturing is doing well – the latest survey measuring US manufacturers’ health (the ISM Manufacturing PMI – which asks manufacturing firms about new orders from their customers, how much they are manufacturing, employee hiring/firing, etc.) increased 1.3 points to May to 54.0.
This data points to an economy that is “ok” – as in expanding a little and not contracting. That makes it much easier for the Fed to raise rates than if the economy was contracting.
They also report that their raw material prices are going up
A secondary interesting point from the survey was that the manufacturers surveyed reported that they are paying higher prices for their raw materials. This points to higher inflation building across many parts of the economy – with a reasonable expectation that these higher input prices will be passed on to consumers in the form of higher product prices.
Issuers may want to consider bringing forward issuance and investors may want to protect their portfolios from higher rates
The take away for issuers and investors is that this might increase their expectation that rates will increase (possibly much more than the market currently expects) – which might make issuers consider locking in rates now and investors consider protecting their portfolios from materially higher rates.