International Trade and Economics — Alpha.Sources

Global Leading Indicators, April 2025 - Hanging on

The April 2025 edition of the global LEI chartbook can be found here. Additional details on the methodology are available here.

Global leading indicators were hanging on for dear life in April strained by the shock of President Trump’s tariff measures. A rebound from current levels that keeps the cyclical upturn alive is not without precedent, but it is rare—and historically, such rebounds have offered little comfort to investors. Portfolios with high sensitivity to the global macro cycle are likely to face continued weakness.

Global Leading Indicators Feb 2025 - In the Pipe, for Now

It’s been a while since I’ve been writing about markets and the economy. The reason, as I touched on earlier this month, is that I’ve been working on some scripts—with the help of my now trusty and indispensable ChatGPT+ subscription—to automate chart generation for the indicators and data I use and look at regularly. The first of these, on the OECD’s suite of leading indicators, is now done in its beta version, so let’s get started.

The February 2025 version of the chartbook can be found here. It is updated with the February values for the OECD leading indicators in amplitude- and seasonally-adjusted format. The coincident indicator is based on CPB’s data, and is most recently updated for January.

Is global inflation (re)accelerating?

This is the question everyone wants an answer to after another week where bonds have been beaten to a pulp, a trend which is now starting to bleed into equities. More specifically, the real question is whether US inflation is accelerating? It is too soon to tell, and for the record, we don’t think so. But for now, markets are being fed with headline macro data signalling that the US economy is more resilient than previously anticipated, as well as vulnerable to upside inflation risks. As a result, investors have kept buying the dollar and selling treasuries at the start of 2024. The latter, in turn, has spilled over into indiscriminate selling of bonds in other jurisdictions.

Is a soft landing in the bag?

According to U.S. Treasury Secretary Janet Yellen economists who predicted that a sustained period of high U.S. unemployment—and perhaps even recession—would be needed to bring down inflation are now “eating their words”. This follows earlier comments by Ms. Yellen last month that a soft landing is “on track.” Claudia Sahm, a US macroeconomist, agrees. In an interview with the FT earlier this month, she says:

The soft landing is not here yet. But it is in the bag.

Markets seem to agree with the assessment by the Treasury Secretary and Ms Sahm; bonds have rallied like a bat of hell in the past month—temporarily pegged back by a semi-hot NFP report on Friday—and equities are in a good mood too. November, I am reliably told by the financial media, was the best month for a standard 60/40 portfolio … ever. And why wouldn’t markets be celebrating? Inflation in the developed world is now falling rapidly, and what was a significant inflation shock in core prices has now been turned on its head, as the charts below show.

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