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US recession fears after services PMI miss

A poor week for US economic data..


The services sector accounts for nearly 80% of US GDP and so along with the UK, this monthly number is obviously very important. A slight decrease was expected yesterday (55.1 v 54.5), but the result was much, much worse. A reading of 51.2 is the second lowest number seen since the pandemic began. 

This week has seen the US produce weak labour, manufacturing and now services numbers which has intensified recession fears. A soft landing is far from expected once inflation settles down in the US, helped by the aggressive Fed. Instead, a hard landing is predicted from interest rates being too high, for too long which is likely to plunge the economy into an unduly harsh recession. This will be felt around the world and will have implications on currency values. 

Investment bank, Nomura, a consistent GBP negative analyst, have today drastically u-turned their positions and views on £-$ this year. Going from a previous 1.12 forecast to 1.30 is quite the leap and once again highlights, no-one really knows what is going to happen next in this market..