A federal debt ceiling deal is in the works. The stock market yawned. The bond market rallied. Interest rates fell even though the deal would allow Treasury Secretary Janet Yellen to issue lots of Treasuries to replenish her department's checking account.
Perhaps the bond market responded to the Dallas Fed's May regional business survey released today, which was weak. So were the other four regional business surveys released earlier this month. The average of their business activity indexes fell to -17.5, suggesting that the national M-PMI (at 47.1 in April) might have fallen further below 50.0 in May (chart). The same can be said for the average of the regional new orders indexes and the comparable component of the M-PMI.