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The Institute for Supply Management’s Purchasing Managers Index fell to 49.1 in August, according to data released this morning. That was below all the forecasts of economists surveyed by Bloomberg. In this survey anything below 50 indicates that a sector is contracting. The contraction in the PMI is the first in three years and marks the lowest level in the survey since January 2016. The new orders sub-index in the survey dropped to a seven-year low.

All of this will rightfully make the financial markets nervous about a potential recession. And as of 1:45 p.m. New York time the Standard & Poor’s 500 was down 1.07% and the Dow Jones Industrial Average was lower by 1.44%. The NASDAQ Composite fell 1.40% and the Russel 2000 small cap index was off 1.79%.

The yield on the 10-year Treasury continued to fall–to 1.46% (down another 4 basis points)–as investors and traders sought the safety of bonds. The yield on the 2-year Treasury kept pace dropping to 1.45%. The dollar strengthened rising 0.04% against the currencies in the Dollar Spot Index (DXY.) Gold climbed 1.70% and silver was up 4.90%. U.S. crude benchmark West Texas Intermediate was off 2.56% and the international benchmark Brent crude slid 1.11%.

Just a bit of context. On the negative side, the contraction signaled by the PMI confirms the Federal Reserve’s data showing that output in the manufacturing sector has fallen in two consecutive quarters. On the positive side, manufacturing represents only about 13% of the U.S. economy. The ISM Purchasing Managers Index for the non-manufacturing part of the U.S. economy will be released tomorrow. That index has been much stronger than the manufacturing index. Economists surveyed by project that the non-manufacturing index will climb to 54 for August, up from 53.7 in July, and solidly in expansion.

So today’s data has indeed increased fear of a recession–gold was up 1.70% and silver 4.90% as of 1:45 p.m. in New York–but I don’t think it significantly raises the odds of a U.S.–or global–recession, Those odds are still about 35% for a U.S. recession in 2020.