Surveys Say NY & Philly Manufacturing Weak

Stock prices tanked yesterday following reports showing sharp declines in December's retail sales and industrial production. As a result, the Citigroup Economic Surprise Index (CESI) fell to -24.7 (chart). The 13-week change in the 10-year US Treasury yield (in basis points) is highly correlated with the CESI and it continued to drop yesterday.

On Tuesday, January's NY Fed business survey was much weaker than we expected, but today's Philly Fed business survey was in line with our expectations (chart). Together they suggest that the other three regional surveys will be weak and so will the national M-PMI, to be released at the start of February.