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Markets are dashing hopes in services's ISM to find a bottom

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The ISM Production Index has shaken the markets, but the ISM Production Index can put an end to all the drama.

The services sector is much larger than the industrial sector. There is no dispute that production is slowing down everywhere, but consumption in the US is still strong. However, Williams said the US economy is in good shape, but that may not be true in the long run.

What is nice about the ISM indicator is that it is leading, ahead. The August report came out surprisingly strong with 56.4 versus 54 expected. It was surprising because it was a difficult time for markets after Trump announced the new tariffs.

The report came in at 55.1 against the range of 54 and 57.5, and the ISM slipped below the healthy 50. However, the components are important. The new orders accurately reflect the state of the economy and what will happen in the coming months. It rose to 60.3 from 54.1 in August.

As for markets, traders are preparing for worse-than-expected results. Fear has seized markets after weaker production data. If we have a value greater than 54 or better, this can turn the risk sentiment toward a better one and the markets find their bottom.

Graphs: Used with permission of Bloomberg Finance L.P.


 Trader Martin Nikolov

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