The US S&P Global Manufacturing PMI reached 55.3 in May. This was above the expected level of 54.<\/p>\n
A reading above 50 indicates expansion in manufacturing activity. The May result suggests the sector continued to grow.<\/p>\n
The strong manufacturing number of 55.3 for May is a positive surprise, signaling that the U.S. economy has more momentum than we previously thought. This robust data suggests that concerns about a significant slowdown might be overstated. In the coming weeks, we should prepare for the market to re-evaluate the Federal Reserve’s path.<\/p>\n
This data lessens the probability of a near-term interest rate cut, a narrative that gained traction after the softer inflation reports in late 2025. According to the CME FedWatch Tool, the market has already reduced the implied probability of a September rate cut from 45% to below 30% in early trading. We should consider positioning in interest rate futures that bet on rates remaining higher for longer.<\/p>\n
For equity markets, this is a double-edged sword. While a strong economy supports corporate earnings, the prospect of higher interest rates could pressure valuations, especially with the S&P 500’s forward P\/E ratio currently elevated near 21. We might look at buying some downside protection through SPY put options or consider call options on the VIX, which is trading at a relatively low level of 13.5.<\/p>\n
A more hawkish Fed outlook is typically bullish for the U.S. dollar. The dollar index (DXY) has been trading in a tight range around 105 for the past few weeks, and this news could be the catalyst for a move higher. We could explore call options on the U.S. dollar or put options on currencies like the euro to position for renewed dollar strength.<\/p>\n
The report also points to rising demand for industrial commodities. Copper prices, a key indicator of economic health, have already risen 1.5% this morning to over $4.70 per pound. We should consider long positions in industrial metal or energy derivatives, as this PMI number suggests manufacturers will be increasing their purchases of raw materials.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" US S&P Global Manufacturing PMI rose to 55.3 in May, beating forecasts, signaling continued manufacturing expansion.<\/p>\n","protected":false},"author":103,"featured_media":17027,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[11],"class_list":["post-53834","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates","tag-indices"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/53834","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/103"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=53834"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/53834\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17027"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=53834"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=53834"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=53834"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}