Weak PMIs Validate Our Recession Risk Call

2025-02-22 02:20:00 ET

Summary

• The Services PMI for January dropped to 49.7 which indicates that services are now contracting.
• January retail sales declined a disconcerting .8% last week and the Q4 GDP report weakened to 2.3% from over 3% the prior quarter, with the critical investment component dropping 1.1%.
• Weakness in the old economy has been driven by the sell-off in the 10-year treasury to a 4.8% in response to harsh Fed rhetoric, causing the 30-year mortgage rate to rise above 7%.

On Friday, the Services PMI for January dropped to 49.7 which indicates that services are now contracting. In addition, existing homes sales declined 5% M/M and consumer sentiment came in at 64.7 vs. expectations of 67.8....

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