The Institute of Supply Management releases a monthly report on its manufacturing index. This index measures the output of goods and services and largely resembles the Gross Domestic Product report that comes out quarterly. The ISM stated today that the manufacturing index for May showedstocks bonds fall continued growth, at 55.4.

But it took a while for the report to finally reach its ultimate number as there were two revisions during the trading day. Any reading above 50.0 indicates a growing economy. Economists were expecting a reading of 55.5 but in just one day the corrected releases included a 53.2 and a 56.4 tally before finally settling down at 55.4, just shy of the 55.5 target. The previous month reported an identical number at 55.4.

This is indeed a steady stream of growth and it should no longer be related to shedding off the winter cold. And as we’ve been accustomed to lately, when we see positive signals about the economy both stocks and bonds sell off. The Dow closed down 21.29, the first drop in four days. Mortgage bonds and Treasuries also shed some profit with the 30 year FNMA bond fell 14/32, increasing mortgage rates slightly.

As both stocks and bonds drop, an explanation can be made when viewing both the end of the current QE program along with an expectation of the Fed entering the fray and start raising rates once again. The inflation rate is near the Fed’s target with multiple messages regarding when and if rates will be on the move up. Some say that the first Fed moves will be in the first quarter of next year while others are more cautious, anticipating something sooner should the economy continue to make strides, albeit small ones. The unemployment report released this Friday should provide some guidance. Pay less attention to the actual rate and more toward the number of new non-farm payroll jobs created. The 288,000 number from last month was much higher than expected and anything close to or above 300,000 might cause a selloff in both stocks and bonds.