The trend in the US for macro economic data over the last 2 months has been deteriorating with macro data on aggregate disappointing coming in below economic forecasts, including but not limited to factory orders, industrial production, consumer confidence, capex expenditure, non farm payrolls.
Overnight ISM Non-Manufacturing PMI was released and the data was below expectations hitting 51.4 against a forecast of 55.4.
The chart below is the ISM Non-Manufacturing PMI over 10 years from 2006 to today. You can see from the down trend lines shown from late 2007 to 2009 where ISM Non-Manufacturing PMI was falling leading into the US recession. Over to the right of the chart you can see a similar downtrend developing with the data, as it gets closer to falling below 50.0 which would indicate contraction with the ISM Non-Manufacturing PMI data.
Even though US macro data continues to disappoint overall, US stocks don't seem to mind at all.
Looking at the S&P500 on a intra-day 30 min chart, you can see that after the ISM Non Manufacturing announcement there was sharp drop from 2182 to around 2175/6 level, before quickly recovering higher to above the level of 2182 before the announcement.
Since the market has been reducing the odds of a rate hike for both Sep and Dec 2016, after the Non farm payrolls announcement disappointed, this may explain why the S&P500 is less than 4 points off its record closing price of 2190.15
Based on the prevailing trend and relationship with macro news and the S&P500, the market appears to be more interested in rates in the US remaining low then the US real economy growing.
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