The US services PMI for August stands at 52.0, surpassing the expected 51.0. Previously, the PMI was recorded at 50.1, indicating an upward trend.<\/p>\n
Business activity reached 55.0, compared to an expected 53.0, and a prior reading of 52.6. New orders have risen to 56.0 from the previous 50.3, showing an increase.<\/p>\n
Employment remains low, with a reading of 46.5, slightly up from the prior 46.4. The prices index has decreased to 69.2 from 69.9 in the previous period.<\/p>\n
Today’s report on the services sector presents a very mixed signal, which often leads to opportunity. The jump in business activity and new orders suggests the economy is more resilient than we thought. However, the contraction in the employment component is a major red flag that cannot be ignored.<\/p>\n
This conflicting data complicates the Federal Reserve’s path, making their next move harder to predict. The strong activity and sticky prices support a “higher for longer” interest rate stance, which we saw play out during late 2023 when the market consistently had to delay its rate cut expectations. This suggests that betting against aggressive rate cuts in the coming months, using instruments like SOFR futures, could be a sound strategy.<\/p>\n
The dismal employment number in this report puts enormous focus on the official Non-Farm Payrolls data due tomorrow, September 5th. Looking back, the jobs report for July 2025 showed a respectable but cooling gain of 187,000 jobs. If tomorrow’s official government number confirms the weakness seen today, it would signal a serious crack in the labor market and could sharply reverse market sentiment.<\/p>\n
For us, this level of uncertainty is best traded through volatility. The VIX index has been relatively low, recently trading around the 14 level, which seems too complacent given these cross-currents. We should consider buying options that profit from a large price swing in either direction, such as straddles on the S&P 500, to capitalize on the reaction to tomorrow’s jobs data.<\/p>\n
The stronger-than-expected economic activity also provides a tailwind for the U.S. dollar. The Dollar Index (DXY) recently pushed back above 104, and this report reinforces the idea of U.S. economic outperformance. We could look to position for further dollar strength against currencies where the economic picture is weaker.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" US services PMI rises to 52.0 in August, driven by stronger business activity and new orders.<\/p>\n","protected":false},"author":62,"featured_media":16967,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-30229","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/30229","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=30229"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/30229\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16967"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=30229"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=30229"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=30229"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}