ISM Non-Manufacturing PMI Exceeded Expectations, Pushing Treasury Yields Up

Key Insights

• ISM report indicated that Services PMI increased from 54.4 to 56.5, exceeding analyst expectations. 
• The surprising ISM Services PMI data pushed Treasury yields higher. 
• The safe-haven U.S. dollar gained ground after the release of the ISM Services PMI data as traders bet on a more hawkish Fed, while stocks suffered a sell-off.  

Services PMI Data Shows Surprising Strength

U.S. has just released ISM Non-Manufacturing PMI report for November. The report indicated that ISM Non-Manufacturing PMI increased from 54.4 to 56.5, compared to analyst consensus of 53.3.

This surprising report has already had a material impact on global market dynamics. The higher-than-expected report boosts chances for a more hawkish Fed at the next meeting on December 14.

Traders also had a chance to take a look at the Factory Orders report for October. The report showed that Factory Orders increased by 1% month-over-month, while analysts expected that they would grow by 0.7%.

Earlier, traders evaluated the final readings of the S&P 500 Global Services PMI report, which indicated that Services PMI declined from 47.8 in October to 46.2 in November. Numbers below 50 show contraction.

U.S. Dollar Rallied After ISM Report

The U.S. Dollar Index made an attempt to settle above the 105 level after the release of the higher-than-expected ISM Non-Manufacturing PMI report.

Treasury yields moved higher, and the yield of 10-year Treasuries moved closer to the 3.60% level. A move above this level may provide additional support to the American currency.

Gold declined towards the $1775 level as hawkish Fed is bearish for gold and other precious metals. Silver, platinum, and palladium have also found themselves under pressure.

S&P 500, which has been moving lower ahead of the ISM report, gained additional downside momentum and tried to get below the 4020 level. NASDAQ Composite moved below the 11,350 level.

For a look at all of today’s economic events, check out our economic calendar.