Macro Melt Up

Bullish ISM Report

The ISM comprises two indexes: the ISM Manufacturing Index and the ISM Services Index. These indexes take a broad measure of growth and inflation pressures by evaluating the economy between two categories. As of June, the ISM-M decelerated but maintained the cycle uptrend that began in the summer of 2023. The ISM-S index expanded beyond expectations, maintaining its expansion.

JUNE ISM Services

(rising Growth, falling Inflation)

Business activity, new orders, and employment in the services sector accelerated in June while the inflation component (Prices paid) fell.

JUNE ISM Manufacturing

(falling growth, falling inflation)

Although ordering demand slowed significantly, employment grew, and prices fell, indicating a cooling and a less inflationary manufacturing sector.

Stable Employment & Lower Inflation Pressures

As we factor in both ISM indexes, we see an overall rise in employment and a fall in prices. This means lower inflation and recession expectations.

Tame OIL Tame Inflation

Following OPEC's June Meeting, Oil broke down, signaling a slower global economy and disinflation. Inflation expectations should fall further if Crude Oil doesn't rally during the peak summer season.

Positive CPI Surprise

Given all the previous context, my assumption is that June's CPI report will be a positive surprise to kick off the summer rally.

Macro Melt-Up Underway