The 1st August industrial figure out, the NY manufacturing survey was about in line with expectations at 7.1 vs the consensus of 8.0 and is up from 5.1 in July but which was down sharply from the June level of 19.6. The components though were mixed as New Orders fell 13 pts to -2.7, the 1st negative figure since June ’09 and Shipments fell by 18 pts to -11.5, the weakest since March ’09. Backlogs rose 6 pts but still remain negative at -10. Employment rose 6 pts to 14.3, a 3 mo high. Inventories fell 3.5 pts but remained positive at 2.9. Prices Paid and Received fell to the lowest since Dec ’09. After falling sharply in July, the average workweek rose to +7.1 from -9.5. The overall outlook 6 months out did fall by almost 6 pts to 35.7, the lowest since July ’09. Net-net, after the FOMC fanned growth fears last week the market will take in line but we have many more Aug manufacturing surveys to see before drawing conclusions about this month.
According to the just reported June TIC data, China’s holdings of US Treasury securities fell by $24b after dropping $32.5b in May. This takes their total holdings to $843.7b, the lowest since June ’09 but still above Japan’s holdings of $803.6b. Up until June, the reduction in China’s holdings was more due to the maturation of short term US bills that were not fully reinvested back into Treasuries. June however saw the 1st net selling in longer term US Treasuries since April ’09. Japan’s holdings of US Treasuries are now at an all time record high after rising by $16.9b in June.