ISM Non-Manufacturing Highest in Over a Year

- ISM Non-Manufacturing for May rose to 59.7 versus estimates of 55.8 and a reading of 56.0 in April.

BOTTOM LINE: Service industries expansion in the US unexpectedly accelerated last month to the highest level in more than a year, a sign the economy is strengthening, Bloomberg said. The New Orders component of the index rose to 57.4 from 55.5 the prior month. The Prices Paid component rose to 66.4 from 63.5 the prior month. The Employment Component of the index rose to 54.9 from 51.9 the prior month. I continue to believe US economic growth is accelerating substantially this quarter to around 3% or slightly higher, however growth is likely to decelerate back below 3% in 3Q as the effects of higher long-term rates take hold. This should push the 10-year yield back down to around 4.75%.