We haven't talked enough about ISM Manufacturing this week because Thursday's PCE data was the first report in more than 2 weeks that mattered.  Thus, the focus was on what came first as opposed to what has a track record of moving markets.  It didn't help that ISM Manufacturing was separated from its usual top tier companions (all scheduled for next week).  Nonetheless, we now have a fresh reminder not to sleep on ISM Manufacturing!  The 47.8 vs 49.5 result has been enough for a decent rally to the best levels in more than 2 weeks.

Why the question mark?  This is only one day spent beyond the walls of our recent holding area.  It's not over either.  The range breakout not only needs technical confirmation, but also fundamental confirmation from weaker econ data next week.  If ISM services were to tell a different story, markets would likely pay much more attention to that. 

On that note, how correlated are ISM services and manufacturing?  The question came up on MBS Live this morning and it led to the following charts.  In the bigger picture, the two are well correlated because both speak to general economic momentum. 

In the shorter term, the two are surprisingly divergent, however, thus suggesting that next week's ISM Services data is anyone's guess.