U.S. Is Officially in Recession Mode, What does it really mean?

Posted on February 6th, 2008 by Yours Truly under Investing

The Institute for Supply Management’s (ISM) non-manufacturing index, released Tuesday, plummeted to 41.9 from 54.4 in December as analysts fore casted a figure of 53. It was the steepest drop since the index was launched and the lowest reading since the aftermath of the Sept. 11, 2001, terrorist attack. A reading of less than 50 indicates a contraction of service activity, which accounts for about three quarters of the U.S. economy. The sharp decline in the ISM index is significant because it suggests a recession could be worse than the relatively mild one experienced in 2001. A remarkable 14 of 18 sectors ranging from insurers, restaurants, hospitals reported to the ISM stating activity shrank in January.

As a result, fed fund futures are pricing in a 74% chance of another 50bp cut next month.

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Not much going on again on the trading aspect and my previous sole lot on the EUR/GBP was exited early due to the rising strength in the GBP the last couple of days. The exit point was @ 0.7460 which netted a profit +14 pips and the entire trade netted a total of +59 pips.

The opportunity to re-enter may very well occur very shortly however due to the event risks of interest rate statements from both parties; any entry should be delayed until Thursday.