Posts tagged global economy
Global Leading Indicators, June 2025 - What Tariffs?

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

Global leading indicators improved further at the end of Q2, as markets and decision-makers in the real economy concluded that Mr. Trump’s tariff threats are more bark than bite. However, the U.S. President has since rekindled his appetite for tariffs, unveiling several high-profile measures targeting Asian economies, along with the weekend bombshell of a 30% tariff on imports from Mexico and Europe.

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Global Economy, International Trade and Economics , International Trade, Monetary Policy, Markets and Tradingclaus vistesenOECD LEIs, leading indicators, tariffs, global economy, equities, bonds, Donald Trump
Global Leading Indicators, March 2025 - The world before tariffs, and after

The March 2025 edition of the global LEI chartbook can be found here. Additional details on the methodology are available here. I’ve added a few new elements: a chart showing the G20 LEI and its three-year rolling Z-score; a comparison between headline LEI diffusion and global equities; and a chart of the first three principal components of the LEIs. Of these, the first component is the most significant—as I’ll explain below.

As the name suggests, leading indicators are designed to provide early signals on the business cycle, and by extension, on the cyclical component in financial markets and the most cyclical individual sectors. However, there are times when turning points or events disrupt the underlying conditions so abruptly that they effectively reset the clock. Trump’s tariff shock—and its implications for global goods and capital mobility—is one such event. But for the record: what did the global economy look like on the eve of this tariff shock? As it turns out, it was doing quite well.

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US Economy, Markets and Trading, Global Economy, Economics, Business, and Finance claus vistesenleading indicators, Mr. Trump, equities, bonds, global economy, markets
A look at the bright side

I detect a lot of worry about the global economic outlook. This is understandable. Equities are close to, or at, record highs with extended valuations. Growth fears have crept higher on investors’ list of concerns, most notably with signs of softness in the US labour market as well as persistently weak domestic demand in Europe. Add a still-fragile Chinese economy to the mix, despite hopes of stimulus, and the prospect of a leap in economic uncertainty after next month’s US presidential elections, it is no wonder investors are on edge. But what if I told you that global leading indicators are strong and healthy and that combined with falling inflation and falling interest rates, this is one of the best macro-setups for risk assets. I suspect many would reply that such tailwinds already are comfortably priced-in to equity and credit markets. I am sympathetic to that point, but hear me out.

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Markets and Trading, Economics, Business, and Finance claus vistesenbonds, inflation, business cycle, leading indicators, growth, global economy, yield curve, yields, bond yields, monetary policy, central banks, US, UK, Eurozone
Cruising for a Bruising

Financial market pundits are a bit like dogs chasing cars; they wouldn’t know what to do if they caught one. And so it is that after trying to figure out whether the economy and markets would achieve a soft landing in the wake of the post-Covid tightening cycle, no one quite knows what to think now that the soft landing appears to have arrived.

Let’s list the key requirements for a soft landing.

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Global Economy, Markets and Trading, Monetary Policy, US Economy, UK, General info, Eurozone watchclaus visteseninflation, interest rates, growth, global economy, David Zervos, Dario Perkins, larry summers, Philips Curve, prices, CPI, markets, equities, bonds, leading indicators