Service Sector Growth Disappoints Giving Lift to Notes and Bond

September 6, 2016 12:36PM CDT

A  51.4 reading at 9 A.M. this morning confirming softening economic conditions in the U.S. economy has triggered a lift off trading range lows at 16828 as our fed is viewed  as handcuffed again by the real world. It’s the worst reading since 2010 which is a serious miss considering the manufacturing sector also missed last week. The number is subject to seasonal issues with the typical end of summer slowdowns so the stock market appears to be taking that track and is only down marginally. Anyways the poor number indicates a likely GDP around 1% and obviously the stock market for now doesn’t fear a serious round of fed tightening with that drop back. Therefore unless stocks can seriously break down I’d expect bonds to be hemmed in at top of range near 17116.  Later this week the PMI services index will be watched for confirmation. There are fed members speaking during the week but since the fed data dependent economic releases remain more important. Also getting a boost this morning is the gold market and most major currencies against the dollar taking their cue from the same weak ISM report. 

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