ISM Manufacturing in May was lower than expected at 51.4. It has been on a downward track since it peaked back in Jan 2004 at 62.8. Financial markets are speculating that the Fed could soon be done tightening. The ISM index supports that view. Since 1989, the Fed has tended to stop tightening when the ISM fell to around 53-54. The end of tightening in Feb 89, Feb 95, Mar 97 and May 2000 were associated with ISM index levels of 53.2, 53.8, 55.1 and 54.1 As we are now below that at 51.4, it suggests the Fed will stop soon, if history is any guide. Of course, one could argue things are different now, given nominal and real rates are still so low. Nevertheless, this historical experience needs to be respected. Rate CUTS, meanwhile, tend to begin when ISM falls into the 45-48 region based on the easing cycles which began in 1989, 1995, 1998 and 2001, so we're still some way off a Fed easing. But in 2006, things may well look very different.