The ISM Non-Manufacturing PMI index dropped to 51.4 percent in August of 2016, well below market expectations of 55. It is the lowest reading since February of 2010 as activity, employment, and new orders all slowed.

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Here’s the real terrifying part. The last two times that the ISM fell below 52 percent, it was preceding a recession! If we zoom out on the chart above, you can see that the ISM Non-Manufacturing PMI index fell below 52 in both 2001 and again in early 2008.

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Fed Rate Hike Probability

The Fed Funds Futures rate for a September 2016 rate hike fell to a 21% probability. The chance of a December 2016 rate hike is at 50.6%

Traders are betting that the bad ISM Non-Manufacturing PMI index number means no rate hike in September. Folks, if the economy keeps deteriorating at its current pace, we won’t get a rate hike in December either.