EconoTicker

The January ISM Services (Non-Manufacturing) PMI held at 53.8 (vs 53.5 expected, 53.8 prior), signalling steady expansion in the largest part of the U.S. economy. Under the hood, the mix turned less comfortable: Prices Paid jumped to 66.6 (vs 65.0 expected, 65.1 prior), pointing to re-accelerating input inflation in services. Meanwhile, New Orders fell to 53.1 (vs 55.0 expected, 56.5 prior), a meaningful cooling in demand momentum. The labour signal weakened too, with Employment at 50.3 (vs 52.3 expected, 51.7 prior), hovering just above the expansion line. Offsetting some of the softness, Business Activity rose to 57.4 (vs 55.2 expected), suggesting current output remains firm even as forward demand indicators cool. Net: growth is still OK, but the combination of hotter prices + softer orders/employment keeps the “sticky inflation” narrative alive for USD rates.

U.S. mortgage activity weakened further. The MBA 30-year mortgage rate edged down to 6.21% (from 6.24%), but MBA mortgage applications fell -8.9% WoW (vs -8.5% prior). The pullback was broad: the Purchase Index dropped to 165.4 (from 193.3), the Mortgage Market Index fell to 330.8 (from 363.3), and the Refinance Index eased to 1,269.7 (from 1,332.2). Bottom line: even with slightly lower rates, demand cooled—suggesting affordability and buyer caution remain dominant headwinds.

U.S. Republican Congressman Pat Fallon said on X that Iran’s leadership has fueled “death and hardship” for Iranians and “innocents abroad,” describing the system as a destabilizing force in the Middle East and arguing that the Iranian people deserve freedom from the Ayatollah’s repression. His remarks add to the growing chorus on Capitol Hill framing Tehran’s internal crackdown and regional posture as inseparable—and positioning “a free Iran” as a security objective, not just a human-rights stance.

The IBD/TIPP Economic Optimism Index improved to 48.8 in February (vs 47.9 expected, 47.2 prior), marking a second straight monthly uptick. While the index is still just below the 50 line that typically separates optimism from pessimism, the upside surprise suggests household/consumer sentiment is stabilizing—an incremental support for the “resilient demand” narrative tied to USD outlook.

The Redbook retail-sales gauge eased to 6.7% year-on-year, down from 7.1% previously. The pullback suggests consumer spending growth is still solid but losing a bit of momentum—an incremental signal that demand may be normalizing after a stronger prior reading.

Mike Johnson is under pressure Tuesday as the United States House of Representatives holds a procedural vote (the rule) to advance a Senate-passed stopgap that would end the partial shutdown and fund most of the government through Sept. 30, while extending United States Department of Homeland Security funding for two weeks as lawmakers negotiate changes tied to U.S. Immigration and Customs Enforcement. With a razor-thin GOP margin, Johnson can afford almost no defections, while Donald Trump is pushing Republicans to back the bill “as-is,” warning “there can be no changes.” Democrats are expected to be more willing on the final passage than on the rule vote, which includes items many oppose—setting up the procedural vote as the real stress test for Johnson’s whip count.

Bitcoin bounced 2.8% to $78,558.4 by 01:42 ET (06:42 GMT) after sliding to $74,635.5 in the prior 24 hours—its weakest level since early April—as a cascade of stop-losses and margin calls accelerated selling. The weekend drop was driven by forced unwinds of leveraged positions, with derivatives data pointing to several billion dollars of crypto bets being wiped out in a short span and longs accounting for most forced closures. Thin liquidity reportedly amplified the swings, letting relatively small moves trigger outsized liquidation cascades. Sentiment has also been shaken by policy uncertainty after Donald Trump’s nomination of Kevin Warsh to lead the Federal Reserve, a pick widely seen as favoring balance-sheet shrinkage and tighter financial conditions—typically negative for high-beta risk assets like crypto.

The latest US bill auctions showed a small uptick at the very front end: the 3-month T-bill cleared at 3.600% versus 3.580% previously (a +2 bps move), while the 6-month T-bill was unchanged at 3.525%. The split suggests slightly higher near-term funding costs/demanded yield at the shortest maturity, with the 6-month tenor stable—consistent with a market still calibrating the timing and path of policy easing.

The Atlanta Fed GDPNow estimate for Q4 remained unchanged at 4.2%, matching both the latest and prior readings (4.2% / 4.2% / 4.2%). The flat print signals no material shift in the model’s near-term growth tracking—keeping the narrative of solid momentum intact unless incoming data force a revision.

The ISM manufacturing PMI jumped to 52.6 in January (vs 48.5 expected, 47.9 prior), flipping the sector back into expansion and signaling a much stronger start to the year than markets anticipated. The rebound was reinforced by a sharp rise in new orders to 57.1 (vs 47.4 expected), pointing to improving demand and pipeline activity. Employment improved to 48.1 (vs 46.0 expected, 44.8 prior) but remains below 50, suggesting factories are still cautious on hiring even as activity accelerates. Meanwhile, prices paid stayed elevated at 59.0 (vs 59.3 expected, 58.5 prior), keeping the “sticky input inflation” narrative alive—an overall mix that can be USD-supportive via higher-for-longer rate expectations if follow-through shows up in output and broader inflation data.

The US S&P Global Manufacturing PMI rose to 52.4 in January (vs 51.9 expected, 51.9 prior), a clear upside surprise that points to stronger expansion in factory activity at the start of the year. With the index moving further above the 50 threshold, the data reinforce a “resilient growth” signal for the US cycle—potentially supportive for USD sentiment if the strength reflects improving new orders and output rather than temporary inventory effects.

The Wall Street Journal reports that Xi Jinping has further centralized control over the People's Liberation Army (PLA), a shift the paper argues could expand his latitude in any future Taiwan-related decision-making. The article says Xi has removed five of six top-tier generals over the past three years, highlighting the reported detention and removal of Zhang Youxia—a vice chair of the Central Military Commission and long-time ally—whose ouster was reported around January 24. The takeaway in the piece: fewer heavyweight military figures remain who could meaningfully push back on Xi’s choices on Taiwan.