Jan 29, 2020

Fed manufacturing indexes jump in January

Data: FactSet; Chart: Naema Ahmed/Axios

The Richmond Fed's January manufacturing survey recorded its highest reading in almost a year and a half on Tuesday.

Why it matters: The survey is considered a potential leading indicator of overall manufacturing because it is released close to month-end and may offer clues on national manufacturing readings like those from ISM and IHS Markit.

The big picture: Each of the Fed's regional manufacturing indexes has beaten expectations this month, suggesting a rebound in the sector may be coming after a very difficult 2019, as experts have predicted.

Go deeper: Manufacturing should bounce back in 2020

Go deeper

Philly Fed index boomed in January

Data: Federal Reserve Bank of Philadelphia, projection from Wall Street Journal; Chart: Axios Visuals

The Philadelphia Fed's manufacturing business outlook rose to near its highest level on record and notched its biggest reading above economists' expectations in history.

The big picture: Analysts at BMO Capital Markets note that the monthly reading is among the highest in history (in the 99th percentile) going back 30 years and marked the largest two-month jump since 1995.

The market is expecting multiple rate cuts in 2020

Data: CME Group; Note: Chart does not include expectations below 5% for a rate hike in 2020; Chart: Andrew Witherspoon/Axios

Just four days into February, traders have thrown out the Fed's guidance that it will remain on the sidelines in 2020, and lined up bets for multiple U.S. interest-rate cuts.

What's happening: Fed fund futures prices show that as the coronavirus outbreak has worsened, expectations are rising that the Fed will take action, as policymakers did last year when the U.S.-China trade war began to ravage the manufacturing, trade and transportation industries.

U.S. industrial production stalls out again

Data: Federal Reserve; Chart: Axios Visuals

U.S. industrial production fell by 0.3% in January, month over month, and the previous month was revised down to -0.4%, according to the Federal Reserve.

By the numbers: The reading brings the annualized rate to -0.8% and is the fifth reading in a row below zero.