ISM Services Business Activity (Sep) 56.5 (Prev. 61.7)

ISM services prints have a history of repricing the rates market more through direction and breadth than through the headline level alone, and a mid-50s reading remains in expansionary territory even after a pullback from a prior elevated reading, so the distinction that matters is between a stepdown in momentum and a genuine softening. In past episodes, a decline of this kind off a strong base has tended to be read as normalisation rather than deterioration, with the internal detail, new orders, employment, prices paid, driving whether the front end and the dollar treat it as a growth or an inflation story. The prices paid component has historically been the swing factor, since services inflation is the stickier leg of the disinflation argument and a cooling activity print alongside still-firm prices has repeatedly cut both ways for the curve. Worth watching is the employment sub-index, which has on previous occasions previewed the tone of the subsequent payrolls release, and whether the soft data and hard data confirm or contradict one another. The follow-ons are the accompanying components and any regional survey corroboration before the next major labour and inflation prints.