Production, new orders, imports and exports all increased, according to the latest Purchasing Managers Report from ISM. But according to the Labor Department, the economy has shed 66,000 manufacturing jobs over the past year.
In the April jobs report, inflation outstripped wage growth for the first time in three years. When the May jobs report comes out on Friday, we'll find out if that's a trend.
Consumers now expect prices to rise 4.8% over the next year, up from 3.4% in February, and businesses and bond markets are signaling similar expectations.
The war in the Middle East is pushing up short-term government yields, on expectations that the Fed is increasingly likely to hike interest rates over the next two years.