A whiff of reflation - Oct. G3 Leading Indicator Watch

Our cyclical roadmap remains that the Fed has eased monetary policy into a backdrop of elevated nominal GDP. Recession is unlikely if financial conditions are loose and savings rates are falling.

Summary by Region:

• US: Today’s mix of weak labor market data, resilient growth, and improving liquidity was last seen in 2002-03, when the US economy experienced a “jobless” recovery.
• China: Our growth and inflation LEIs are still rebounding, while excess liquidity tailwinds remain. More stimulus is needed for housing/consumer.
• Eurozone: We are taking profits on our SOFR vs Euribor Dec 25/26 convergence trade established last month.