This week’s theme is the weakening in the services sector amidst manufacturing potentially looking to rebound. We aim to cover all asset classes, what to buy, what to sell, and what to expect next in the months to come when it comes to both US and global PMI’s. 

Today’s services PMI’s from the EZ showed further signs of the European services sector weakening, with both Spain and Italy surprising to the downside of expectations of a >50 reading. Almost all countries in Europe are now experiencing a contracting services sector, and there is frankly not much positive to say about Europe. The EUR has recently reversed its upward trend, and equity volatility is on the rise in Europe as everyone is trying to figure out what Lagarde will do next. 

But jumping to the main theme of this piece – the spread between US Manufacturing PMI and US Services PMI – we have prepared an overview with simple beta studies. In short, a handbook of what to buy and sell when the ISM spread increases.