Home > Uncategorized > Brief Update: 2010/01/06: Don’t let the banter fool you. The news is weak!

Brief Update: 2010/01/06: Don’t let the banter fool you. The news is weak!

▪  Headline improvement in the US ISM Non-Manufacturing Index (DEC) and its Employment component are not necessarily constructive in their own right, and are accompanied by other troubling economic data.  While upon the month, the headline figure is still only back to balanced at best, and the employment aspect remains down in contractionary ground. And all of this relates back to the services sector and consumer that are now the fragile key to any further sustained economic and equity market improvement. 

▪  The reason all of this is so important into today’s FOMC minutes release is the timing of that meeting, which was prior to the recent mortgage rate increases that have weighed on housing. They will be a significant indication of the Fed’s sentiment on ending its asset purchase program without the influence of the recently weaker US housing data. That is in turn important for its potential impact on consumer sentiment into the early part of this year with so many expecting things to return to ‘normal’, which will support stronger equities and commodities prices while weighing upon fixed income market.  However, there are still daunting challenges ahead…

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