Divine Disinflation In NM-PMI Survey

Investors are rooting for "divine disinflation." We all want inflation to come down without a painful recession. We want the Fed to tighten one more time by 75bps and then to pause for a while. This morning's release of August's survey of non-manufacturing purchasing managers was consistent with this wishful thinking. That might explain why the S&P 500 rallied after the report was released at 10 a.m. despite the bad news out of Europe, with Russia shutting down a major natural gas pipeline to the region. Here are the details:

(1) The NM-PMI climbed for the second month, to 56.9, after easing steadily from 58.3 in March to 55.3 in June; the index was at a record high of 68.4 in November (chart below).