2/10/25 - Expanding Manufacturing and services PMI’s
Strong ISM Data Signals Economic Optimism
The latest ISM data for January 2025 has brought some encouraging news for the U.S. economy. The Manufacturing PMI rose to 50.9%, marking the highest level since September 2022. This indicates expansion in the manufacturing sector after 26 consecutive months of contraction. The Services PMI also showed growth at 52.8%, marking the 10th out of the last 12 months of expansion.
Sector Performance Highlights
The strongest sectors based on the ISM reports include:
Accommodation & Food Services 2. Finance & Insurance 3. Food, Beverage & Tobacco Products 4. Health Care & Social Assistance 5. Mining 6. Petroleum & Coal Products 7. Primary Metals 8. Textile Mills
On the other hand, the weakest sectors are: 1. Fabricated Metal Products 2. Nonmetallic Mineral Products 3. Other Services 4. Printing & Related Support Activities 5. Professional, Scientific & Technical Services 6. Real Estate, Rental & Leasing 7. Utilities 8. Wood Products
Currency and Bond Market Insights
The DXY (USD index) is currently at 108.184, down from a recent high of 110.176 on January 13th, 2025. The upward momentum in the USD appears to have finished, with many analysts predicting a potential decline back to 105. The US 10-year yield is at 4.472%, down from a recent high of 4.809% on January 14th, 2025. The upward momentum in yields also seems to have stalled.
Equity Market Trends
The S&P 500 and Nasdaq 100 show signs that their upward momentum has broken. Despite this, net fiscal flows from the treasury into the private sector remain strong, leading some investors to buy the dips in growth. The weekly MACD for these indexes has bearishly crossed from positive to negative.
Commodities and Cryptocurrencies
WTI crude oil has seen its momentum slow, but the weekly MACD remains positive for now. Natural gas is expected to see its weekly MACD bearishly cross from positive to negative soon. Gold has bullishly crossed over on the weekly MACD, although it is already overbought on the weekly RSI. Bitcoin and Solana, along with other cryptocurrencies, have seen their weekly MACD bearishly cross from positive to negative.
Forex Market Outlook
The USD looks poised to weaken against many currencies, making timing crucial for forex traders.
