Fed Funds vs. 2-Year U.S. Treasury Yield (Leading Indicator) The current 2-year U.S. Treasury yield, which is below the federal funds rate, indicates that the Fed’s monetary policy is restrictive. Furthermore, the 2-year yield typically leads the fed funds rate by about 20 weeks. Image: Morgan Stanley Research
Yield Curve vs. VIX (Leading Indicator) Should U.S. equity investors anticipate increased volatility ahead, given that the yield curve typically leads the VIX by three years? Image: BofA US Equity & Quant Strategy
The Conference Board Leading Economic Index (LEI) for the U.S. In May, the U.S. LEI decreased by 0.5%, which may indicate a more subdued economic environment in the near term. Image: The Conference Board
U.S. Consumer Prices Index vs. U.S. Composite PMI Input Prices (Leading Indicator) U.S. Composite PMI Input Prices tend to lead U.S. CPI by 6 months, reflecting the impact of changes in input prices on consumer prices over time. Image: Charles Schwab
S&P 500 Buybacks vs. CEO Confidence (Leading Indicator) S&P 500 buybacks are likely to rebound, as CEO confidence typically leads buybacks by 6 months. Image: Morgan Stanley Research
U.S. ISM Services Prices Paid Index vs. U.S. CPI Inflation (Leading Indicator) The U.S. ISM Services Prices Paid Index tends to lead U.S. CPI inflation by 2 months. Are Fed rate cuts still likely in 2024? Image: Deutsche Bank
Central Banks – Global Monetary Policy Stimulus Leads Global Manufacturing PMI As global monetary policy stimulus tends to lead global manufacturing PMI by 8 months, could this signal the end of the economic slowdown? Image: Topdown Charts
S&P 500 Average Negative Sentiment Score YoY vs. Quarterly EPS YoY (Leading Indicator) The significant increase in corporate sentiment indicates a potential recovery in earnings, which is good news. Image: BofA Global Research
Copper to Gold Ratio and U.S. 10-Year Treasury Yield (Leading Indicator) The 10-year U.S. Treasury yield has not supported the copper/gold ratio. Image: Morgan Stanley Research
Inflation – CPI Services vs. PPI Services and ISM Non-Manufacturing Prices Paid (Leading Indicator) The ISM Non-Manufacturing Prices Paid and PPI services tend to lead CPI services by 9 months. Image: Alpine Macro