Trust, but verify - July G3 Leading Indicator Watch

US growth momentum is stalling (retail sales, industrial production and home prices contracting MoM). At the same time, a rebound in ISM services new orders and tight credit spreads are propping up our US growth LEI. This suggests caution, not yet panic. Q3 is a window of vulnerability for US labor data to surprise negatively.

Summary By Region:

• US: Coincident labor data still surprisingly resilient, but leading labor data signal downside risks. Consumption is slowing but not collapsing against a backdrop of depleted savings. Tariff impact are starting to fade from leading inflation inputs.
• China: Growth leading indicators are improving but there is no major reflation without fiscal stimulus as structural headwinds persist.
• Eurozone: The growth outlook remains stable but unexciting, while yields and the euro look elevated as inflation leading indicators are rolling over.