Rally stumbles after US data shock
|Poor ISM service PMI jolts investors
The surge from Friday’s lows was rudely interrupted by today’s US ISM services PMI. While bad data can boost hopes of a Fed rate cut, there was the kicker of a rise in the prices paid sub-index, reminding markets that inflation is still a force to be reckoned with. Yesterday’s huge surge is still intact, so we can’t write off the bounce just yet, but investors need to remember that a rate cut isn’t the be all and end all of the situation.
Inflation worries lift gold
Traders slammed the buy button in gold on Friday, and further signs of inflation have revived the price after a mixed morning. A summer of rising prices and debate over the politicisation of the Fed seems to augur well for a higher gold price; tariffs got plenty of mention in the ISM report today, pointing towards a potentially hotter CPI report next week.
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