The Chicago Purchasing Managers’ Index (PMI) for December recorded a value of 43.5, surpassing the forecast of 39.5. This suggests an improved economic performance in the region’s manufacturing sector. <\/p>\n
The PMI metric serves as a gauge for economic activity, and a figure above expectations indicates stronger manufacturing output. This performance can impact various economic decisions and influence future market strategies.<\/p>\n
The Chicago PMI report for December has come in better than feared at 43.5, which is a significant beat over the 39.5 we were expecting. While this number still points to a contraction in manufacturing, the surprise to the upside suggests the economic slowdown might not be as severe as we thought. This could prompt a reassessment of the hard landing scenario that has been gaining traction.<\/p>\n
This data point is particularly noteworthy given the context of the fourth quarter of 2025, which saw slowing GDP growth and a rise in jobless claims to over 240,000 per week in November. The market has been pricing in aggressive Federal Reserve rate cuts for early 2026 based on that weakness. A stronger manufacturing report, even if still in contraction, may cause us to temper those expectations slightly.<\/p>\n
For those trading equity derivatives, this could be a signal to reduce downside protection in the near term. Selling some out-of-the-money puts on the S&P 500 for January expiration could be a viable strategy to collect premium. The VIX index, which has been hovering around 21, will likely see a dip on this news, making it cheaper to purchase longer-dated protection for later in the first quarter.<\/p>\n
Looking back at the slowdown of 2023, we saw several false starts where regional data improved temporarily before resuming a downward trend. Therefore, it is prudent to view this as just one data point rather than a confirmed reversal. Hedging any new bullish positions with cheap VIX calls for February or March could be a sensible approach.<\/p>\n
In the interest rate markets, this may cause a slight sell-off in front-end bonds, pushing yields a little higher. We might see traders pare back bets on a 50-basis-point cut from the Fed in March, shifting the odds more firmly toward a 25-basis-point move. This could be expressed by adjusting positions in SOFR futures to reflect a slightly less dovish path.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Chicago\u2019s December PMI hits 43.5, beating forecasted 39.5, signaling stronger regional manufacturing activity.<\/p>\n","protected":false},"author":62,"featured_media":17025,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-37950","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/37950","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=37950"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/37950\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/17025"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=37950"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=37950"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=37950"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}