More ISMs

Early in the month you get all the various ISM and PMI surveys, across the world, usually divided into manufacturing and services.

Overnight, we got the ISM splits, and they were quite weak. Bonds (yields) dropped accordingly (plus the GDPNow data dropped below 2%); let your eyes drift to the ISM manufacturing new orders data, at 45.4, quite a drop for the prior, recent 3 month high.

So just a few signs of moderating US growth starting to creep in. PMIs, ISMs, haven’t mapped well (at all?) to actual GDP data, or “hard data” in general (measures like retail sales and industrial product) but there’s enough evidence of moderating wages growth, and moderating labour market data in general, to suggest that things are changing on that front.

If the Fed maintains the generally restrictive stance of monetary policy, that slowdown could become quite a bit more marked; obviously that is a backdrop that’s good for bonds.

We shall see.

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