When statistics make your head spin, it becomes harder to see things clearly. Two economic indicators published simultaneously cast doubt on the outlook. Let's start with the negative: the ISM services index came in well below expectations and in contraction territory at 49.9 vs. 52 expected and 51.6 previously, contradicting the services PMI published by S&P, which rose to 53.70 vs. 52.30 expected. Overall, the US bond market eased, suggesting that it seems more inclined to follow the ISM's lead than S&P's, as bad news could trigger the Fed's famous put. In terms of forecasts, it should be noted that investors are beginning to anticipate a rate cut in September, with the status quo being favored for next week and the July 18 meeting.
Source: CME
Meanwhile, the European Central Bank is continuing its monetary easing with an eighth consecutive rate cut. It should be said that it has all the more room for maneuver now that inflation has returned to the 2% target in the main eurozone countries. The million-dollar question now is whether the ECB will adopt a more dovish stance in order to boost the eurozone economy. In her speech last Thursday, Christine Lagarde gave a clue by saying that the cycle of rate cuts was coming to an end, plunging traders into a state of confusion (in other words, European indices took a hit, falling in the wake of the statement).
Fortunately, the mood quickly turned positive with the creation of 139,000 jobs in the US in May, compared with a forecast of 126,000, dispelling fears of a slowdown in hiring. The unemployment rate is in line with expectations at 4.2%. The only downside is that bond yields rose sharply following the publication of a US labor market that remains (too?) resilient.
