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Weekly Indicators: Long Leading Forecast Just Barely Above Neutral Edition

Hale Stewart profile picture
Hale Stewart

By New Deal Democrat

February data included a very strong jobs report, with the only weak spot remaining tepid wage growth. ISM services was also strongly positive. January factory orders declined, and wholesale sales declined, while inventories rose, meaning the inventory to sales ratio also rose, a negative.

My usual note: I look at the high frequency weekly indicators because while they can be very noisy, they provide a good Now-cast of the economy and will telegraph the maintenance or change in the economy well before monthly or quarterly data is available. They are also an excellent way to "mark your beliefs to market."

In general, I go in order of long leading indicators, then short leading indicators, and then coincident indicators.

NOTE that I include 12-month highs and lows in the data in parentheses to the right.

Interest rates and credit spreads

  • BAA corporate bond index 4.64% up +.11% w/w (1-yr range: 4.15 - 4.90)

  • 10-year treasury bonds 2.89% up +.03% w/w (2.05 - 2.93)

  • Credit spread 1.75% up +.08% w/w (1.56 - 2.30)

Yield curve, 10 year minus 2 year:

  • 0.63%, up +0.01% w/w (.50 - 1.30)

30-year conventional mortgage rate

  • 4.58%, up +0.06% w/w (3.84 - 4.58) (tied for new 4-year high)

BAA Corporate bonds, having recently tied their expansion low, are now a positive. If they move just 0.02% higher, to above 4.65%, I will downgrade them to neutral. Mortgage rates and treasury bonds are now both negatives. The trend for these for most of 2017 was neutral. The yield curve is positive, while the spread between corporate bonds and treasuries is strongly positive.


Mortgage applications

  • Purchase apps down -1% w/w

  • Purchase apps up +1% YoY

  • Refi down +2% w/w

Real Estate loans

  • Unchanged w/w

  • Up +3.9% YoY ( 3.3 - 6.5)


This article was written by

Hale Stewart profile picture
Hale Stewart spent 5 years as a bond broker in the late 1990s before returning to law school in the early 2000s. He is currently a tax lawyer in Houston, Texas. He has an LLM in domestic and international taxation (MagnaCumLaude). He is the author of the book The Lifetime Income Security Solution. Follow me on Twitter at @originalbonddadYou can read his legal analysis on his law office's blog.

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Comments (1)

thanks for your analysis, much appreciated
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