In a quiet calendar week, the US PMI prints are likely to receive more focus than normal ahead of the Jackson Hole symposium at the end of the week. Investors will be looking for these PMI prints to see if the recent rise in yields is justified or whether or not signs of slowing growth on the horizon may temper some of the Fed’s enthusiasm for higher rates.

The last S&P Global US Services PMI print came in at 52.3 for the month of July. This was the slowest growth in the services sector since March this year. It was also the second drop from May’s high print this year indicating that demand is cooling in the service sector.

Will demand show further cooling? Investors will be watching for a print that comes in below market expectations. At the time of writing, the minimum expectations are not out, but any print that comes in below 50 would show contraction and likely see investors start to expect a slightly less aggressive rate path from the Fed. That would push yields lower, weaken the dollar, and should support gold higher.

It will be necessary for the US S&P Global Manufacturing PMIs to come in weak too as that will further support the need for less aggressive Fed moves. The manufacturing PMIs have been weaker than the services sector (which enjoyed a post-pandemic boost), but any reading under 48 would be the weakest since March this year and would likely send the USD lower, yields lower, and gold higher.

Gold in focus

One way that investors will look to take advantage of any big misses in the data will be by using the daily pivot points for targets and stop levels.