Weekly Indicators: Interest Rates Rise More, Gas Prices Fall More

Sep. 17, 2022 8:00 AM ETSPY, IVV, VOO, VTI, DIA, IWM, QQQ13 Comments
New Deal Democrat profile picture
New Deal Democrat


  • High frequency indicators can give us a nearly up-to-the-moment view of the economy.
  • The metrics are divided into long leading, short leading, and coincident indicators.
  • Gas prices have almost completely undone their Ukraine war spike, giving consumers a second wind.
  • But interest rates have risen back to 5- and 10-year highs, putting longer-term pressure on all borrowers.

Woman Looks Up At Rising Interest Rates



I look at the high frequency weekly indicators because while they can be very noisy, they provide a good nowcast 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, then coincident indicators.

A Note on methodology

Data is presented in a "just the facts, ma'am" format with a minimum of commentary so that bias is minimized.

Where relevant, I include 12-month highs and lows in the data in parentheses to the right. All data taken from St. Louis FRED unless otherwise linked.

A few items (e.g., Financial Conditions indexes, regional Fed indexes, stock prices, the yield curve) have their own metrics based on long-term studies of their behavior.

Where data is seasonally adjusted, generally it is scored positively if it is within the top 1/3 of that range, negative in the bottom 1/3, and neutral in between. Where it is not seasonally adjusted, and there are seasonal issues, waiting for the YoY change to change sign will lag the turning point. Thus I make use of a convention: data is scored neutral if it is less than 1/2 as positive/negative as at its 12-month extreme.

With long leading indicators, which by definition turn at least 12 months before a turning point in the economy as a whole, there is an additional rule: data is automatically negative if, during an expansion, it has not made a new peak in the past year, with the sole exception that it is scored neutral if it is moving in the right direction and is close to making a new high.

For all series where a graph is available, I have provided a link to where the relevant graph can be found.

Recap of monthly reports

August data included positive retail sales and a slight increase in the U. Of Michigan consumer confidence index, but a decline in industrial production. CPI rose slightly, but the core measure, driven by owner's equivalent rent, rose sharply. PPI declined.

Long leading indicators

Interest rates and credit spreads


  • BAA corporate bond index 5.57%, up +0.03 w/w (1-yr range: 3.13-5.57) (new 6 year high)
  • 10-year Treasury bonds 3.45%, up +0.13 w/w (1.08-3.48)
  • Credit spread 2.12%, down -0.10 w/w (1.65-4.31)

(Graph at Moody's Seasoned Baa Corporate Bond Yield | FRED | St. Louis Fed )

Yield curve

  • 10 year minus 2 year: -0.32%, up +0.08 w/w (-0.48 - 1.59)
  • 10 year minus 3 month: +0.29%, up +0.01% w/w (0.04 - 2.04)
  • 2 year minus Fed funds: +1.54%, up +0.31% w/w

(Graph at 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity | FRED | St. Louis Fed )

30-Year conventional mortgage rate (from Mortgage News Daily) (graph at link)

  • 6.35%, up +0.38% w/w (2.75-6.28)

Corporate bonds are at the top of their 5 year range, so negative. Treasury bonds and mortgage rates are also near their 5 or even 10 year peaks, so their rating is also negative.

The spread between corporate bonds and Treasuries remains positive. The yield curve at the important 2 to 10 year level remains inverted - at one of the worst levels since 2000 - so is negative. The 3 month-10 year spread has varied between neutral and positive for the last two months, and was neutral again this week.


Mortgage applications (from the Mortgage Bankers Association)

  • Purchase apps up 0.2% w/w to 198 (197-349) (SA)
  • Purchase apps 4 wk avg. down -2 to 199 (SA) (341 high Jan 29, low 199 this week)
  • Purchase apps YoY -29% (NSA)
  • Purchase apps YoY 4 wk avg. -24% (NSA)
  • Refi apps down -4% w/w (SA)
  • Refi apps YoY down -83% (SA) (lowest since 2000)

*(SA) = seasonally adjusted, (NSA) = not seasonally adjusted

(Graph at yardeni.com)

Real Estate Loans (from the FRB)

  • Up less than +0.1% w/w
  • Up +8.8% YoY (-0.9 - 8.9)

(Graph at Real Estate Loans, All Commercial Banks | FRED | St. Louis Fed )

The highest mortgage rates in 12 years killed both purchase and refinance mortgage applications, the four week averages of which continue at or close to 6 and 20 year lows, respectively. We have seen this feed into all of the monthly housing sales and construction reports, and in the past several months, into prices, which have likely peaked during the summer.

From 2018 until late in 2020 real estate loans with few brief exceptions stayed positive. Earlier last year they varied between neutral and negative, but for the past several months have been very positive. This is being helped by inflation in house prices; thus the turn in the indicator will be when that cools.

Money supply

The Federal Reserve has discontinued this weekly series. Data is now only released monthly. July data was released three weeks ago:

  • M1 m/m down -0.1%, YoY Real M1 down -3.3%
  • M2 m/m up +0.2%, YoY Real M2 down -3.2%

No recession has happened without a YoY real M1 negative, or YoY real M2 below +2.5%. Real M2 fell below that threshold in March. Real M1 also turned negative as of May.

Corporate profits (Q2 actual + estimated S&P 500 earnings from I/B/E/S via FactSet at p. 26)

  • Q2 2022 actual unchanged at 56.87, up 5.3% q/q
  • Q3 estimated down -0.04 to 56.15, down -1.3% q/q

FactSet estimates earnings, which are replaced by actual earnings as they are reported, and are updated weekly. The "neutral" band is +/-3%. I also average the previous two quarters together, until at least 100 companies have actually reported. Now that Q3 is included, the average is +2.0, which turns this indicator from positive to neutral.

Credit conditions (from the Chicago Fed) (graph at link)

  • Financial Conditions Index unchanged (loose) at -0.22 (-0.09 - -0.72)
  • Adjusted Index (removing background economic conditions) up +0.01 (less loose) to -0.09 (+0.19 - -0.75)
  • Leverage subindex down -0.03 (less tight) to +0.20 (+0.81 - -0.39)

In these indexes, lower = better for the economy. The Chicago Fed's Adjusted Index's real break-even point is roughly -0.25. In the leverage index, a negative number is good, a positive poor. The historical breakeven point has been -0.5 for the unadjusted Index. Leverage is at its highest since the Great Recession, obviously very negative.

Short leading indicators

Economic Indicators from the late Jeff Miller's "Weighing the Week Ahead"

  • Miller Score (formerly "C-Score"): up +21 w/w to 293, +76 m/m (125 6/24/22 - 446 on 10/8/21)
  • St. Louis Fed Financial Stress Index: down -0.02012 to -1.7621 (-2.1880 8/5/22 - -0.0609 12/3/21)
  • BCIp from Georg Vrba: down 19.3 to 50.5 iM's Business Cycle Index (100 is max value, below 25 is recession signal averaging 20 weeks ahead)

The Miller Score is designed to look 52 weeks ahead for whether or not a recession is possible. Any score over 500 means no recession. This number fell below that threshold at the beginning of August 2021, so not only is it negative, but we are now in the "recession eligible" time period.

The St. Louis Financial Stress index is one where a negative score is a positive for the economy, and during its limited existence, has risen above zero before a recession by less than one year. Thus the present reading is also a strong positive for the economy.

Trade weighted US$

In early 2021, both the broad rating and the USD against major currencies turned higher YoY, and so changed to neutral. With both measures now well above +5% YoY, these ratings are negative.

Commodity prices

Bloomberg Commodity Index

  • Down -0.78 to 116.74 (79.11-135.43)
  • Up +19.8% YoY (Best: +52.3% June 4)

(Graph at BCOM | Bloomberg Commodity Index Overview | MarketWatch )

Bloomberg Industrial metals ETF (from Bloomberg) (graph at link)

  • 153.24, up +0.88w/w (131.43-230.32)
  • Down -7.2% YoY (Best +69.0% May 7)

During the Boom last year, commodity prices soared, and total commodities were very positive. Total commodities (which include oil) are still in the top 1/3rd of their range, so they remain a positive. The decline in industrial metals has put that indicator near the bottom 1/3rd of its 52 week range, so a negative.

Stock prices S&P 500 (from CNBC) (graph at link)

  • Down -4.8% to 3873.33

Since January 3 of this year, there have been ongoing new 3 month and even 1 year lows, and no 3 month highs, so this indicator has been a negative - until three weeks ago, when stocks made a new 3 month high. Since in the past 3 months we have had both, this indicator has switched to neutral.

Regional Fed New Orders Indexes

(*indicates report this week) (no reports this week)

  • *Empire State up +33.3 to +3.7
  • *Philly down -12.5 to -17.6
  • Richmond down -10 to -20
  • Kansas City down -14 to -16
  • Dallas up +4.8 to -4.4
  • Month-over-month rolling average: up +4 to -11

The regional average is more volatile than the ISM manufacturing index, but usually correctly forecasts its month-over-month direction. These had usually been extremely positive ever since June 2020, but in the last several months have fallen, and precipitously so in the past three months. The indicator having fallen below -5, it turned negative.

Employment metrics

Initial jobless claims

  • 213,000, down -5,000 w/w
  • 4-week average 224,000, down -8,000 w/w

(Graph at St. Louis FRED)

New claims made new all-time lows on a 4 week average in April. Once this metric failed to make a new 3 month low, its rating has changed to neutral. It will not turn negative unless and until the 4 week average is higher YoY. In the past four weeks it reversed its recent negative trend.

Temporary staffing index (from the American Staffing Association) (graph at link)

  • Unchanged at 107 w/w
  • Up +9.1% YoY

This gradually improved to neutral at the beginning of 2021, and positive since then.

Tax Withholding (from the Dept. of the Treasury)

  • $217.4 B for the last 20 reporting days this year vs. $218.4 B one year ago, -$1.0 B or -0.5%

YoY comparisons turned positive in the beginning of 2021, and have remained that way almost every week since. The YoY% change fell below 5% several times in the past several months, making it a neutral, but then it once again rebounded. For the last three weeks it has been negative YoY, so has turned negative.

Oil prices and usage (from the E.I.A.)

  • Oil down -$0.56 to $86.48 w/w, up +34.2% YoY ($62.32 - $123.70)
  • Gas prices down -$.06 to $3.69 w/w, up $0.54 YoY
  • Usage 4-week average down -9.0% YoY

(Graphs at This Week In Petroleum Gasoline Section - U.S. Energy Information Administration (EIA))

Gas prices are now in the bottom 1/3rd of their 1 year range, and so have turned all the way to positive. Oil has rebounded a little in the past several weeks, but is in the middle of its 52 week range, and so it remains neutral.

With the big decline in gas prices, I expect that at least in terms of mileage driven, usage will turn more neutral. It obviously hasn't yet, but the YoY comparisons have stopped deteriorating and have improved a little.

Bank lending rates

  • 0.432 TED spread up +0.146 w/w (0.02 -.685)
  • 2.990 LIBOR up +0.023 w/w (0.0753- 2.830) (graph at link)

TED was above 0.50 before both the 2001 and 2008 recessions. Since early 2019 the TED spread had remained positive, except the worst of the coronavirus downturn, until earlier this spring. Since a little over a month ago it has been generally declining towards or into the neutral range, and this week it has declined all the way back to positive.

In general the stressors that appeared with the Russian invasion of Ukraine are now easing, as the risks are known and contained.

Coincident indicators

St. Louis FRED Weekly Economic Index

  • Down -0.59 to +2.62 w/w (+2.53 9/3/22 - +7.01 9/11/21)

In the 5 years before the onset of the pandemic, this Index varied between +.67 and roughly +3.00. Just after the Great Recession, its best comparison was +4.63. After a very positive 2021, it declined to less than half its best YoY level, thus changing to neutral.

Restaurant reservations YoY (from Open Table)

  • September 8 seven day average +6% YoY (Best +31% Oct 21)
  • September 15 seven day average -2% YoY (Worst -29% Jan 13)

The comparison year for this metric is 2019 and not 2021. This year the metric gradually improved to neutral, and last week, went positive. But this week the comparison changes back to neutral.

Note I am now measuring its 7 day average to avoid daily whipsaws.

Consumer spending

  • Johnson Redbook up +11.4% YoY (high 21.4% on Dec 28, 2021; low 10.4% Aug 12)

In April 2020 the bottom fell out in the Redbook index. It has remained positive almost without exception since the beginning of 2021.


Railroads (from the AAR)

  • Carloads down -0.2% YoY
  • Intermodal units down -1.7% YoY
  • Total loads down -0.9% YoY (Best +34.0% April 23, 2021)

(Graph at Railfax Report - North American Rail Freight Traffic Carloading Report )

Shipping transport

Rail carloads turned positive early in 2021, before gradually fading to negative from August through the end of the year and the beginning of this year. The total loads index has been consistently negative for the past four months. In the past two months, with both carloads and total loads turning positive, rail turned neutral, and this week turned back positive.

Harpex increased to near record highs again earlier this year, but has since backed off. BDI has traced a similar trajectory, warranting a change to negative.

I am wary of reading too much into price indexes like this, since they are heavily influenced by supply (as in, a huge overbuilding of ships in the last decade) as well as demand.

Steel production ( American Iron and Steel Institute)

  • Up +0.5% w/w
  • Down -6.4% YoY

Since the end of March 2021, against terrible comparisons, this metric had been positive, typically running at a double digits higher YoY percentage growth. This spring, after almost continuous deterioration, it turned negative, and has remained so.

Summary and conclusion

Below are this week's spreadsheets of the long leading, short leading, and coincident readings. Check marks indicate the present reading. If there has been a change this week, the prior reading is marked with an X:

Long leading Indicators Positive Neutral Negative
Corporate bonds
10 year Treasury
10 yr-2 yr Treasury
10 yr-3mo Treasury
2 Yr Treasury-Fedfunds
Mortgage rates
Purchase Mtg. Apps.
Refi Mtg Apps.
Real Estate Loans
Real M1
Real M2
Corporate Profits
Adj. Fin. Conditions Index
Leverage Index
Totals: 3 1 10
Short Leading Indicators Positive Neutral Negative
Credit Spread
Miller Score
St. L. Fin. Stress Index
US$ Broad
US$ Major currencies
Total commodities
Industrial commodities
Stock prices
Regional Fed New Orders
Initial jobless claims
Temporary staffing
Gas prices
Oil prices
Gas Usage
Totals: 4 4 6
Coincident Indicators Positive Neutral Negative
Weekly Econ. Index
Open Table
Rail x
Tax Withholding
Financial Cond. Index
Totals: 4 2 5

This week continued the theme from last week, as interest rates increased again, but gas prices continued to fall. The former is a long leading indicator, while the latter is a very short leading indicator.

As a result, the long leading forecast continues to be very negative. The short term forecast is only slightly negative. The nowcast remains neutral.

The consumer has been given a second wind by gas prices completely unwinding their Ukraine war spike. Once that ends, I anticipate that the underlying fundamentals - and they are quite negative - will reassert themselves.

This article was written by

New Deal Democrat profile picture
New Deal democrat As a professional who started an individual investor for almost 30 yeas ago, I quickly focused on economic cycles and the order in which they typically proceed. I have been writing about the economy for nearly 15 of those years, developing several alternate systems that include mid-cycle, long leading, short leading, coincident, lagging and long lagging indicators. I also focus particularly on their effects on average working and middle class Americans.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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