US September Composite PMI Rises to 58.4, Driving 10-Year Treasury Yield Above 5%
Strong September PMI readings accelerated growth signals but highlighted renewed cost and capacity pressures. The resulting yield spike above 5% shifts expectations for near-term monetary policy calibration. Primary records show domestic demand as the driver while export weakness and input inflation create offsetting constraints.
S&P Global data showed services activity at 58.7 and manufacturing at 57.0, both exceeding forecasts, with new orders and output accelerating across sectors. Input costs rose at the steepest pace in four years amid oil price increases and supply constraints, while backlogs expanded sharply. Domestic demand drove gains as export volumes declined.
The yield move reflects markets repricing Federal Reserve policy paths, with October hike probabilities increasing per CME FedWatch data. Treasury records confirm the 10-year note yield last sustained above 5% in 2007. This diverges from softer hard data releases earlier in the quarter, highlighting survey-based momentum.
Supply bottlenecks and labor shortages noted in the PMI survey echo patterns from 2021-2022, when similar readings preceded sustained price pressures. Central bank communications from the July FOMC minutes emphasized data dependence on inflation persistence rather than survey optimism alone.
Forward indicators point to potential Q4 output moderation if export weakness persists and cost pass-through accelerates. December CPI and employment reports will determine whether the yield level holds or retraces before year-end policy decisions.
FOMC: No rate change at November 7 meeting if core PCE remains above 2.6% through October release.
Sources (2)
- [1]S&P Global US Flash PMI September 2024(https://www.spglobal.com/marketintelligence/en/mi/products/us-pmi.html)
- [2]US Treasury Yield Curve Data(https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve)