The ISM services sector survey is one of the best forward looking indicators out there and today's edition plunged to 49.6 from 56.5, far worse than the economist consensus of 55.0.
Even worse, the forward-looking new orders component in the survey looks like this:
Market participants are struggling with the idea of whether the economy will have a soft or hard landing in 2023 and today's data illustrate the challenge. The jobs report was strong with unemployment falling to 3.5% from 3.7%, near a record low.
But jobs are a lagging indicator and the ISM services data looks forward so the plunge has the market thinking it's only a matter of time until broader layoffs begin.
That also has the market thinking (once again) that the Fed won't hike rates above 5% and won't be able to hold rates at the peak. In the bond market, there's a rush to safety with 10-year yields down 13 bps to 3.59%.
The dollar is getting crunched across the board with USD/JPY now down to 132.50 after hitting 134.77 earlier.
At 11:15 am ET, we'll hear from Fed speakers Lisa Cook and Raphael Bostic. Later we'll get Barkin and George.