Regional Surveys Suggest Weak M-PMI

Bonds and stocks might rally tomorrow if the M-PMI is as weak as suggested by the regional business surveys conducted by five of the 12 regional Federal Reserve Banks. The average of the five composite indexes dropped deeper into negative territory during October (chart). The average of the new orders indexes remained near recent negative readings, while the average for the employment indexes remained solidly positive. All three are highly correlated with their comparable national PMIs.