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Bessent keeps the Yellen issuance cadence/Tariff fear and order pull forward influences ISM services and trade

Bessent keeps the Yellen issuance cadence/Tariff fear and order pull forward influences ISM services and trade

Peter Boockvar
Feb 05, 2025
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Notwithstanding Scott Bessent’s criticism of Janet Yellen and the cadence of her Treasury issuance where she probably did skew to the shorter end in order to relieve pressure on the long end via stemming excessive supply and thus worthy of criticism, he did not change the maturity schedule in today’s quarterly refunding announcement. He was recommended to shift to more long term paper from the Treasury Borrowing Advisory Committee but seems like he wants to wait a bit before doing so. This is likely today helping the bid to longer term treasuries.

The ISM services index for January softened to 52.8 from 54 and that was below the estimate for no change. Overall business activity at 54.5 fell to a 6 month low with new orders dropping to 51.3, the lowest since June 2024. Backlogs though remained weak at 44.8 vs 44.3 in the month before and still well below 50. Inventories remained below 50 for a 3rd month at 47.5. After today’s ADP and ahead of Friday, the employment component rose 1 pt to 52.3 and compares with the 6 month average of 50.8. Supplier deliveries were 53, a 3 month high but no supply chain issues of note are really evident. Prices paid fell 4 pts to 60.4 after jumping by 5.9 pts last month.

Specifically on employment, the comments given were mixed. One respondent said “Human resources department working aggressively to fill open positions” while another said “Belt tightening due to slower consumer demand.” Six of 18 industries saw a gain in employment vs 9 in December and 5 in November.

Breadth improved from the soft December but is just back to where it was in October and November. To this, 14 of 18 industries surveyed saw growth vs 9 in December and 14 in the two months before.

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