Monetary Policy — Alpha.Sources

Global Leading Indicators, February 2026 - Upturn confirmed; will it slip in rising oil prices?

The 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.

Global Leading Indicators, October 2025 - In the Pipe, Five by Five

Equities 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.

The siren song of dollar weakness

A weaker dollar seems to be the answer to everyone’s prayers at the moment—or more specifically, investors want exposure to the exceptionalism of U.S. capital markets without the currency exposure that comes with it. From the BIS, via FXStreet:

Many investors still want to remain invested in US equities (belief in US exceptionalism is alive and well!), but at the same time, they see growing risks for the US dollar, not least due to the US government’s attacks on the Federal Reserve. A significant depreciation of the dollar could reduce the returns on the actual equity investment or even wipe them out entirely. So what is the solution? Hedging against dollar weakness. Ultimately, these hedges are effectively bets on a weaker US currency and, if widely adopted, create selling pressure on the dollar."

Global Leading Indicators, August 2025 - Who's afraid of payrolls anyway?

Global leading indicators remained robust heading into autumn, despite softening compared to levels at the start of the year. Uncertainty always lurks in financial markets, and currently, (at least) three major questions are weighing on investors—threatening the ongoing optimism in the global economy and financial markets:

U.S. Trade Policy and Tariffs: Did the White House, back in April, effectively throw a boomerang that's now returning to hit both the U.S. and global economy in the face?
Sustainability of the AI Investment Boom: Is the surge in tech and AI-exposed equities evidence of a genuine transformation, a bubble that is about to pop with predictably adverse consequences for markets and the economy.
Global Bond Market Sell-Off: Investors are raising questions about long-term fiscal sustainability in the U.S., U.K., France, and Japan, even speculating about the erosion of monetary policy independence in the U.S. A crisis of confidence in one or more of these large bond markets could trigger turbulence across opaque, illiquid private credit markets, spilling over into the real economy.

02

Alpha Sources Blog