The March update of the global LEI chartbook confirms that a broad-based upturn in global cyclical activity has been underway since the end of the third quarter of last year. However, the data show hints of weakness at the end of Q1, with the number of positive LEIs sitting at 14 out of 20—unchanged from a downwardly revised level in February and below the average of 16 recorded between September and January. This deterioration comes before leading indicators have had to contend with the chaos wrought by the war in Iran and disruptions to energy and commodity flows through the Strait of Hormuz and, more broadly, across the Middle East.
Read MoreThe February update of the global LEI chartbook confirms that a broad-based upturn in global cyclical activity has been underway since the end of the third quarter last year. Granted, the number of LEIs currently in expansion—16—is slightly lower than at previous cyclical peaks. However, the February update and revisions point to a stabilising expansion at this rate, which remains robust overall.
The big question now is whether the upturn will falter in the face of the energy price shock ignited by the war in Iran.
Time will tell.
Read MoreThe disconnect between momentum in global macroeconomic leading indicators, benign conditions in financial markets, and volatile global geopolitics could hardly be greater at the moment. Granted, leading indicators will always lag the latest gyrations in global geopolitics—especially in a world where Mr. Trump is conducting the orchestra—but judging by the past 12 months, not even the potential collapse of NATO or a full-blown EU–U.S. trade war will knock risk assets off course for more than a few minutes. That is not because such events would lack significance, but because markets are now deeply wedded to the idea that Mr. Trump’s bark—on tariffs and otherwise—is much worse than his bite. Time, as always, will tell. The fundamental problem for markets is that lofty valuations and generally exuberant investor sentiment mean that any repricing in response to a less optimistic view of the world would be violent.
Read MoreEquities have wobbled a bit recently, without any obvious catalyst, aside from the most apparent one: they’re expensive by nearly all historical valuation measures. Many investors now appear concerned that the end of the U.S. government shutdown will trigger a deluge of data, potentially revealing that the economy is weaker than expected. That fear, however, doesn’t quite align with the sell-off in the December 2025 SOFR contract, which is casting doubt on what had once seemed a near-certain Fed rate cut in December.
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