Dallas Fed Manufacturing Index Drops To Multi-Month Lows, SP500 Pulls Back From Session Highs

Key Insights

• Dallas Fed Manufacturing Index declined from -15.7 to -23.4.
• Treasury yields moved lower as traders bet on a less hawkish Fed. 
• Weaker dollar and lower Treasury yields pushed gold towards session highs. 

Dallas Fed Manufacturing Index Missed Analyst Expectations

On April 24, the Federal Reserve Bank of Dallas released Dallas Fed Manufacturing Index report, which indicated that Dallas Fed Manufacturing Index declined from -15.7 in March to -23.4 in April, compared to analyst consensus of -14.6.

According to the report, “perceptions of broader business conditions worsened notably in April.” The production index declined from 2.5 to 0.9, while the new orders index increased from -14.6 to -9.6.

The report also noted that “future production index plummeted from 13.5 to 3.0, with the low reading signaling little output growth over the next six months.”

Treasury yields moved lower after the release of the Dallas Fed Manufacturing Index report as traders bet that Fed would be forced to be more dovish in order to provide additional support to the economy.

SP500 Declines Amid Recession Worries

SP500 declined from session highs as traders focused on recession risks. The Dallas Fed Manufacturing Index touched multi-month lows, indicating that the manufacturing segment remained under pressure.

U.S. Dollar Index tested session lows as Treasury yields declined. Forex traders continue to prepare for a less hawkish Fed, which is bearish for the U.S. dollar.

Gold moved back above the $1985 level after the release of the report. Weaker dollar and lower Treasury yields provided material support to gold markets.

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