Leading Economic index: Losing altitude, but soft landing still on radar
Main U.S. indexes modestly green; Dow out front, up ~0.5%
All S&P 500 sectors green; Energy leads
Euro STOXX 600 index up ~0.7%
Dollar, gold, crude down; bitcoin off ~2%
U.S. 10-Year Treasury yield edges down to ~3.88%
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LEADING ECONOMIC INDEX: LOSING ALTITUDE, BUT SOFT LANDING STILL ON RADAR
The outlook for the U.S. economy grew more dour than expected last month.
The Conference Board's (CB) Leading Economic index (LEI) USLEAD=ECI dropped by 0.6% in July, double the 0.3% decline analysts expected.
The index hasn't risen since February 2022.
The LEI is an amalgamation of ten forward-looking indicators, including Treasury yield spreads, PMI new orders, S&P 500 price performance, initial jobless claims and building permits, among others.
"A sharp deterioration in new orders, persistently weak consumer expectations of business conditions, and softer building permits and hours worked in manufacturing drove the decline, together with the still-negative yield spread," writes Justyna Zabinska-La Monica, CB's senior manager of Business Cycle Indicators.
"These data continue to suggest headwinds in economic growth going forward."
But the good news is that July marked the fourth consecutive month that the LEI has not indicated that recession waits in the wings, a message consistent with remarks from Fed policy makers.
Even so, CB expects "GDP growth to slow over the next few quarters as consumers and businesses continue cutting spending and investments," its press release says.
The chart below pits the LEI against one of its constituents, the S&P 500. While as a rule the two tend to move together, their paths appear to have diverged about a year-and-a-half ago, around the time the benchmark index entered a bull market.
And this graphic shows the monthly change in the LEI compared with the consumer expectations component of CB's own Consumer Confidence index:
(Stephen Culp)
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FOR MONDAY'S EARLIER LIVE MARKETS POSTS:
WALL STREET FLAT TO SLIGHTLY HIGHER; FOCUS ON JACKSON HOLE - CLICK HERE
STREAKING NASDAQ FACES SOME TOUGH HURDLES - CLICK HERE
DON'T RELAX JUST YET - CLICK HERE
MOVING TO WALL STREET: IT'S (MOSTLY) PAYING OFF - CLICK HERE
BUSY BRITISH DEALMAKERS BEHIND STERLING'S STRENGTH - CLICK HERE
STOXX FLAT - CLICK HERE
EUROPEAN FUTURES EASE, DEFENCE STOCKS ON RADAR - CLICK HERE
THE SOFTEST OF SOFT LANDINGS - CLICK HERE
LEI and stock market performance https://reut.rs/46Uv0Za
Leading Economic index and consumer expectations https://reut.rs/4dr9uxH
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