Weak U.S. PMI Data & The Week Ahead

• The S&P U.S. Services PMI unexpectedly fell into contraction, dropping to 49.7 in February 2025, signalling declining sector activity.
• With markets expecting a rise to 53, this sharp miss prompted a strong market reaction, including the 10-year USD Treasury rate dropping 7.5 basis points, also influenced by safe-haven buying.
• The services sector slowdown was driven by near stagnation in new orders, with weaker growth attributed to political uncertainty, spending cuts, and pro-inflationary policies under the new U.S. administration.
• Looking ahead, inflation data will be released across the EU throughout the week, offering fresh insights into regional economic conditions.
• In Australia, we expect quarterly pre-GDP data along with the monthly CPI indicator, which will shape market expectations for domestic economic trends.
• The week will conclude with key quarterly GDP data and PCE monthly data from the U.S, potentially setting the tone for global markets.