US Flash PMIs and Michigan Expectations: Firmer Prices After a Treasury Rally

Key takeaways

1. The US two-year yield fell from 4.81% to 4.65% on Thursday as investors bought Treasuries during an AI-led equity sell-off (US Treasury).

2. S&P Global's flash US composite PMI eased to 57.6 from 58.4 at 13:45 UTC on Friday, but selling prices rose at the sharpest rate since August 2022 (S&P Global).

3. The final University of Michigan survey at 14:00 UTC put sentiment at 48.0, above the preliminary 46.3, with year-ahead inflation expectations steady at 4.7% (University of Michigan).

The development

US Treasuries rallied sharply on Thursday 22 October. The two-year yield, which tracks expected Fed policy, fell from 4.81% to 4.65% (US Treasury). CME FedWatch showed a 92.8% chance of no change at the 27–28 October meeting (FXStreet), and Reuters said a December hike was no longer fully priced.

On Friday, S&P Global's flash US composite PMI, released at 13:45 UTC, eased to 57.6 from 58.4 in September. Services slipped to 57.9 from 58.8, in line with calendar consensus of 57.9 to 58.0, while manufacturing rose to 56.0 from 55.9, a 53-month high and above consensus of 55.4 to 55.5 (S&P Global; calendar listings). The bigger signal was prices: selling prices rose at the sharpest rate since August 2022, and Reuters reported the output prices index at 59.8, up from 58.4.

At 14:00 UTC, the University of Michigan's final October survey put sentiment at 48.0, up from the preliminary 46.3 and a 46.3 consensus, and close to September's 48.1. Year-ahead inflation expectations held at the preliminary 4.7%, up from 4.6% in September, and long-run expectations at 3.5%, up from 3.4%. Both are the highest since May (University of Michigan).

Market transmission

A purchasing managers' index (PMI) is a diffusion index: readings above 50 indicate expansion on the prior month. Markets use it as an early read on growth and price pressure. A strong headline tends to lift short-dated yields, but price components can matter more when inflation is the Fed's main concern. Friday's survey paired slightly softer activity with faster price rises, which S&P Global said point to consumer inflation rising further above the Fed's target.

The Michigan survey reaches the dollar mainly through inflation expectations. The final reading confirmed, rather than reversed, the preliminary rise at both horizons. That makes a long Fed hold harder to argue, even after Thursday's rally priced less tightening.

What to monitor next

• Whether the two-year yield retraces part of Thursday's fall to 4.65% as the price signals are absorbed, and how EURUSD responds.

• Final October PMIs on 2 November (manufacturing) and 4 November (services and composite) (S&P Global).

• Michigan's long-run expectations at 3.5%, which compare with a 2024 range of 2.8% to 3.2% (University of Michigan).

• The Fed's pre-meeting quiet period, which leaves little guidance before the 28 October decision.

Reusable lesson

After a large repricing, ask what the market now believes and which part of the next release could test it. Thursday's rally reflected risk aversion more than weak data. Friday's surveys showed a softer headline but firmer prices and steady inflation expectations, the combination that can challenge a dovish repricing even when activity cools. Read the components before the headline.

Invalidation and risk

Survey data are second-tier compared with official employment and inflation figures, and flash PMIs can be revised. If equities slide again, haven demand may keep yields low regardless of the surveys. Higher oil prices could also lift inflation expectations further even if activity weakens.

Glossary

Purchasing managers' index (PMI): A monthly business survey in which a reading above 50 indicates expansion and below 50 indicates contraction.

Quiet period: The days before a Federal Reserve meeting when officials refrain from public comment on policy.

Diffusion index: An index that measures the share of respondents reporting an improvement minus those reporting a deterioration, scaled around 50.

Sources

US Department of the Treasury (2026-10-22): Daily Treasury Par Yield Curve Rates

S&P Global (2026-10-23): S&P Global Flash US PMI, October 2026. https://www.pmi.spglobal.com/Public/Home/PressRelease/07d16568e63346999890940d47639cd9

University of Michigan Surveys of Consumers (2026-10-23): Final Results for October 2026. https://www.sca.isr.umich.edu/

Reuters (via WTVB) (2026-10-23): US business activity cools in October; strong demand fueling price pressures

Reuters (via Euronext Live) (2026-10-23): Asian shares wobble as tech rout boosts bonds, dents rate hike bets

University of Michigan Surveys of Consumers (2026-10-09): Preliminary Results for October 2026

S&P Global (2026-10 (September final releases)): S&P Global US Services PMI and US Manufacturing PMI, September 2026 final

FXStreet (2026-10-23): Japanese Yen gathers strength as CPI inflation exceeds target, backing BoJ rate hikes (CME FedWatch reference)

Disclaimer

This note is provided by the SummitFx Project for general education and market context only. It is not investment advice, not a solicitation to buy or sell any instrument, and not a personal recommendation. Foreign exchange and related markets are leveraged and can result in the loss of some or all of your capital. Figures are believed accurate at the time of research and may already be stale. Always verify live prices, official releases, and your own risk limits before acting. Past market behaviour does not determine future results.