Exports have been a solid contributor to US GDP growth for the last few years, while consumption and residential investment have been more restrained. Recently, with consumption firming and likely to improve further from the tail-wind of lower oil prices, and exports faltering, it appears the drivers of the US economy are trading places.
We mentioned yesterday that the US dollar is again breaking out and that tends to be negative for most stocks around the world. Today, we thought we would continue to look at US dollar strength. The nominal trade-weighted dollar index by major currencies is again very close to breaking out to 11+ year highs.
Perhaps one of the most important questions investors need to answer today is whether we’ve seen the low in the long bonds yields or whether the trend lower is firmly intact.
While we recognize that the negative year-over-year change in the US CPI may soon reverse given gas prices have risen by nearly 30 cents, we wanted to highlight how rare a negative year-over-year print is in the US.
After starting the year off with a bang (thanks to refinancing activity), US mortgage applications are tumbling back towards the depressed 2014 levels. Mortgage apps fell for the third straight week even as the purchase index rose for the first time in seven weeks.
For every country in the MSCI World Index, we measure the percent of stocks that are outperforming the index. The results give us some indication of the breadth in the equity markets.
On Tuesday, the spread between the US 10-year bond and the German 10-year bond reach 180 basis points (currently at 176 basis points). This was the widest spread since May 11, 1989.
The growth leaders and laggards are becoming more apparent by the day – or at least analysts think so. In the below charts we show the median and average top line expected next twelve months growth estimates for certain economic sectors.
We had our first look at manufacturing conditions in February (NY Fed Empire Survey came in below consensus by a few points) and tomorrow we have the industrial production report for the US. What should we expect when that report comes out?
The Citi Economic Surprise index is a quick way to get a high-level look at the condition of economic data around the world.