Philadelphia Fed survey shows record six-month outlook since 1983, but rising price expectations weigh on equities and bonds.
The Dow Jones Industrial Average fell over 400 points to near 53,050 after U.S. economic data exceeded expectations, sparking concerns over persistent inflation. Weekly jobless claims dropped to 206K, below the 210K consensus, while the Philadelphia Fed’s manufacturing index surged to 47.4, far above forecasts of 25.
The forward-looking components of the survey hit their highest levels since August 1983, with six-month activity at 73.6 and future new orders at 66.0. However, future prices paid and received also climbed, signaling firms anticipate higher costs and pricing power, raising bond market alarms.
The 10-year Treasury yield rose back near 5.25%, reversing yesterday’s relief rally, as traders priced in a higher-for-longer rate environment. Equities extended losses on fears that robust economic activity could delay Fed easing.