April?  We are at the end of May, but market participants are seeing that there was a slowing in global manufacturing output in April.   To some, this is clearly a reflection of the supply disruptions resulting from the earthquake and tsunami in Japan.  Several weeks ago, Ford Motor Co. did say that the next few quarters would be impacted by the events in Japan.

Recently, the Philadelphia Federal Reserve Bank – which continually surveys manufacturing and service firms in their region – announced a substantial reduction in their broader index.  Today, the Federal Reserve Bank of Chicago reported more of the same.  The Chicago Fed National Activity Index (CFNAI) for April was reported today at -0.45.  This measure is a weighted average of 85 monthly indicators!  Importantly, this activity index is giving an indication that things are slowing down.  Click here for the report straight from the Chicago Fed.

Market participants are not just looking at national economic indicators today and then pressing the “sell” button.  They are looking overseas at the complete confusion in European sovereign debt issues – and associated risks – and then hitting the “sell” button on equities and buying U.S. Treasuries.  Yields on U.S. Treasuries moved to their lows for the year, meaning that treasury prices are moving strongly higher as risk is being avoided.

The U.S. dollar was again higher today.

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