ISM and Construction Sending Stronger than Expected

Both the manufacturing ISM and construction spending was stronger than expected in the the current environment greenshoots are greeting with dollar selling as participants boost their reflation/risk trades. July mfg ISM rose to 48.9 from 44.8 in June. New wires consensus was near 46.5. This is the best showing in 11 months. Of note, new orders came in 55.3 from 49.2. Employment improved to 45.6 from 40.7. Note that the import index rose more than export index and warns the trade contribution to GDP may not be as great as in Q2.

Separately construction spending unexpectedly rose 0.3%. The market was prepared for another contraction. Residential construction and government projects led the way. The former increased by 0.5% and the later increased by 1.0% (federal +1.9%, state and local gov't +1%).

While the S&P 500 is appears to be stalling in front of the 1000 level at the moment, the dollar continues to trade heavily. It has fallen for a new low for the year against most of the major currencies today except the Japanese yen and Swiss franc, which also tend to under-perform in amid the focus on growth.