Monday's Markets Update (April 24, 2023)

25 Apr 2023 by rate3

On Monday, the Chicago Fed published their tantalizingly abstract National Activity Index (CFNAI), which is a weighted average of 85 monthly indicators of national economic activity. It came in at -0.19 in March, which was unchanged since February, undercutting the forecast of -0.02 and pointing to below-trend growth. Production-related parts of the index contributed the most (-0.08) to the decline in the CFNAI, as compared to the sales-related ones.

At the same time, the Manufacturing Index delivered by the Dallas Fed showed that perceptions of broader business conditions had notably worsened. The index dropped from -15.7 in March to -23.4 in April, its lowest reading in nine months. The labor market continued its moderate growth, with a decline in work hours and an increase in wages.

The Fed's reports are usually ignored by markets since they rely on past information that has already been absorbed by prices. Furthermore, these reports are unlikely to change the opinions of FOMC members when they take their vote on May 2-3, as those opinions are mostly politically driven and have been formed long before the reports were published. However, reading these writings might set many troubled minds at ease by hypnotizing them with an illusory "clockwork" of the economic mechanism's dark interiors. Once again, neither NASDAQ (open: 12053, close: 12037) nor BTC (open: 27443, close: 27383) were affected by the Fed's "science".