The reflation narrative continues even as prices paid drop back markedly in a generally soft ISM Services survey. Even if I have my doubts around trusting PMIs in this cycle, due to a string of head fakes, the market reaction is nonetheless interesting. Is softness in soft services data a good excuse to commence a cutting cycle amidst a cyclical upturn?

It seems like softer prices paid in services are used as an excuse to buy further into the reflation narrative as rate cuts into what is anticipated to be an accelerating cyclical economy will add fuel to the reflationary fire.

Silver, Copper, Materials and other proxy bets of the above view have accordingly celebrated over the past trading sessions and we are monitoring whether to add to these positions again.

Chart 1: Prices paid no longer as worrying for inflation in the US