The December hiccup on the ISM services chart followed by the rapid recovery tells the story of this year in markets. It's a critical indicator that many market watchers -- me among them -- consider a highest-tier indicator.
Until December, it had held up well and the signal was that the consumer was fine and that any recession would be light at worst. Then it crumbled and markets cheered because that indicated the Fed didn't need to hike and may soon start cutting. The drop, perhaps more than any other data point, led to the rally in risk assets at the start of the year.
Then the February data was a rug pull -- a strong rebound led by a jump in new orders to 60.4 from 45.2. A normally-reliable indicator was a mess, showing the largest jump since June 2020. It left everyone off balance and raised questions about a fresh acceleration in the economy and interest rates.
Since the Feb 3 release, which was coupled with ultra-strong non-farm payrolls on the same day, it's been a one-way ticket higher in yields and the dollar; and lower in risk trades.
What next? Today at 10 am ET we get the redux report and the consensus is a slip to 54.5 from 55.2 but estimates range from 52.4 to 56.6.
Aside from that, we get the Fed's Logan (11 am ET), Bostic (11:45 am ET), Bowman (3 pm ET) and Barkin (4:45 pm ET).
