The rebound in the ISM services index in December will soothe concerns that the services sector is starting to run out of steam. Less positively, the surge in the prices paid index to a nearly two-year high of 64.4, from 58.2, is a worry for the Fed as it is consistent with PCE supercore inflation remaining at 3.5% until the middle of next year. This serves as a good reminder that the Fed's fight against inflation is not over, particularly going into a year where tariffs and immigration curbs are set to reignite price pressures.
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