Growth steady, inflation risks known, fade policy divergence - Sep. G3 Leading Indicator Watch

We still see below-trend US growth (no recession) and overstated upside inflation risks. Improving global liquidity and monetary policy easing are tailwinds for risk assets. China remains a disinflationary drag on other economies, while STIR market pricing for ECB vs Fed policy (Euribor vs SOFR) is too divergent for 2026.

Summary by Region:

• US: Housing and labor markets are in slow motion deterioration, but consumption remains resilient, while there are signs of manufacturing green shoots. 
• China: LEIs are still recovering, and excess liquidity will help equities more than the real economy. Deflationary spill over to other economies looks set to persist.
• Eurozone: Markets are pricing 3 Fed cuts in 2026 vs 0 cuts for the ECB. This seems too divergent given the relative growth/inflation outlook.