ISM Services June Purchasing Managers Index (PMI) came in at 48.8, falling below the anticipated 52.7. S&P Global Ratings chief global economist Paul Gruenwald joins Catalysts to discuss the reading and what it signals about the economy's health.

"We've been waiting for some time for the economy to slow down. And the surprises have been on the upside, even on inflation. So now we've got a couple of really soft prints and the focus is going to be on the language coming out of the Fed," Gruenwald explains. He believes an interest rate cut could come in December but notes that as more soft prints come out, a cut could be initiated as soon as September.

He adds, "We're going to need some more evidence. The next move for the Fed is down, question is when it happens." Gruenwald explains that the global rate cut cycle has started as the European Central Bank and Bank of Canada have both cut rates. When it comes to the US, he says, "We need the economy to slow down. But we need it to moderate, not to not to fall off quickly."

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This post was written by Melanie Riehl