ISM's services prices index climbs to 74.0, its highest since July 2022

ISM's prices gauge is a diffusion index. It records how widely input costs rose across respondents. According to CryptoSlate, it does not estimate how large the increases were and cannot be read as a consumer-inflation rate ^[6]. On breadth, September sits 0.5 points below the 74.5 recorded in July 2022 ^[25]. Steve Miller, who chairs ISM's Services Business Survey Committee, said tariffs and fuel were the most cited pressures ^[11]. "Fuel costs were mentioned twice as often as any other single issue impacting performance," Miller said ^[12]. Fuel has been on the survey's list of commodities rising in price for eight straight months, alongside diesel, copper, steel and memory products ^[13].

Most of the cooling is in one component. Business activity fell 5.2 points, from 61.7 to 56.5, while the headline index moved 0.5 ^[26]. Orders and backlogs held up. New orders slipped only 1.1 points to 59.8 ^[14], and the backlog index rose a point to 56.6, also its highest since July 2022 ^[15]. Supplier deliveries slowed for a 22nd month, and Miller said tariff-related delays were extending lead times ^[16].

Firms are adding staff to work through those backlogs. Employment rose 2.3 points to 50.1, an uptick Miller attributed in part to growing backlogs and elevated activity ^[31]. CryptoSlate counts two months of contraction before it, Quartz three ^[30][31].

September's quarter-point increase moved the federal funds target range to 3.75%-4.00% from 3.50%-3.75% ^[8][28]. Jefferson said future adjustments should depend on the data, the outlook and the balance of risks ^[9]. I think the breadth of cost increases outweighs the activity drop for the next decision, because orders, backlogs and hiring all held or rose in the same month ^[14][15][31]. The counter-case has numbers behind it: activity fell 5.2 points while prices rose 1.4 ^[26][27], and a diffusion index can fall as quickly as it rose. If fuel and tariff costs fade, the slowdown carries more weight with the Fed. If they persist while backlogs keep firms hiring, the higher range stays in place longer. The view is wrong if October's prices index drops back below August's 72.6 while activity keeps sliding ^[1].

The step from there to leveraged bitcoin has less support. Coinbase's documentation describes perpetual funding as payments between longs and shorts that keep perpetual prices near spot ^[20], and CryptoSlate says that funding cannot be inferred from the fed funds target ^[21]. A February 2023 New York Fed study using intraday data found bitcoin largely disconnected from monetary and macroeconomic news in its sample ^[22]. The coin's 24-hour change on October 6 came to about $34 ^[29], a rolling figure CryptoSlate says cannot identify a reaction to the survey ^[24]. By CryptoSlate's own test, the funding-risk case strengthens if adverse policy or yield repricing coincides with weaker leveraged demand, and weakens with easing cost pressure, stable rate expectations or stronger buying without leverage ^[32].