QUICK QUILL — Reports from the Chicago and Dallas Fed District Banks suggested that the Chicago PMI could stay below 50 amidst building Texas factory caution. The Federal Reserve’s annual Industrial Production revision was hugely negative, revealing a downshift in resource utilization. Echoes of lost pricing power resonated in the Chicago Fed’s Survey of Economic Conditions. Disinflation in far too many different forms argue for a sub-4% 10-year yield.
TAKEAWAYS
- The Dallas Fed Mfg Current Company Outlook sank from -0.3 to -6.3, a five-month low and triple dip after the 2022-24 slump and early 2025 crash; Current Prices Received have eased from June’s 26.1 to 10.8, and Current Inventories’ -14.3 marked a weak 7th percentile print
- Benchmark revisions took August 2025 Industrial Production from 2.2% above February 2020 levels to flat; meanwhile, Capacity Utilization for August was cut from 77.4% to 75.8%, and the old April 2022 peak was slashed below the August 2018 pre-COVID peak
- CFSEC Labor and Nonlabor Costs have been on a downward trend in recent years and printed at a deeply negative -53 and -30, respectively, in November; the two have reliably guided core PCE since 2020 and flag further downside for the Fed’s preferred inflation gauge