The US services sector is showing signs of stagflation, combining stagnant economic growth with high inflation. The ISM Services PMI reveals elevated prices and a shrinking employment index, a pattern already observed earlier in the year. Core CPI remains elevated according to the Treasury and the Federal Reserve. Market participants are closely monitoring the upcoming July 2026 CPI release and remarks from Fed officials regarding interest rates. Since the services sector accounts for a significant portion of the US economy, these indicators could significantly influence inflation expectations in the coming months.
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