To simplify the complex, theoretically rate hikes should occur in expansionary periods and rate cuts should occur in contractionary periods. In the eyes of the Fed, higher rates can restrict growth and inflation when the economy gets too hot and lower rates can induce growth and inflation when the economy gets too cold. While that...Read More

With the soft-landing scenario moving back into the spotlight, we will review where the key soft-landing indicators are at today and consider the direction of each as we move through 2023. To frame that up, a soft-landing looks something like this – Inflation slows and moderates around 2% target rate Growth stabilizes without entering a...Read More

Last week, we received the S&P Global Flash PMI data for the month of August. This data has historically been a good leading indicator for business activity that ties into important macro measures that are released on more of a lag. When reviewing this data, it is important to note that a reading below 50...Read More

Coming into the year, Chinese macro data was expected by many to rebound and provide a lift to global economic activity. The failure to meet those expectations and continued weakness across most growth and inflation measures will likely have negative implications for global economic activity, including the United States. On a y/y basis, real GDP...Read More

As the debate around monetary policy remains lively, we remain focused on the trend of incoming macro and market data. While we cannot know with certainty what the Federal Reserve will do with the target rate, we can compare the current setup to the last time they decided to cut the target rate in 2019....Read More

Over the last few quarters, we have been highlighting the trend in commercial banks’ ability and willingness to lend and what impact that might have on the economy. Last week, we received data from the Senior Loan Officer Opinion Survey (SLOOS) for 2Q23. Across most measures, banks remain at historically elevated levels, even in categories...Read More

As we move through the second half of 2023, debate around hard-landing, soft-landing, or no-landing scenarios continues to grab headlines. We have been providing updates on economic trends in growth and inflation measures that would suggest we are in a similar environment to prior economic slowdowns. To dive deeper into that analysis, we have shifted...Read More

While many market commentators remain focused on equity indexes, the underlying economic environment continues to decelerate on a rate of change basis. Before reviewing the latest macro trends, the charts below provide some historical context to equity index performance heading into economic slowdowns. The point of this analysis is not to highlight the drawdowns or...Read More

Orders, imports, retail sales, and prices are all sending the same message – demand slowdown. The synchronicity of these growth and inflation measures sliding lower provides further confirmation of a weakening economic backdrop. We believe this is what long-end rates and the yield curve have been signaling for the last few months. If the economy...Read More

Several central banks have hiked rates and are talking about the need to do more, even as most global growth and inflation measures decelerate year-over-year. The market’s response to that divergence has resulted in more inverted yield curves. Historically, yield curve inversions have been a useful indication that some version of an economic slowdown is...Read More