It’s a feature, not a bug - September G3 Leading Indicator Watch
- US: The soft landing narrative is now dominant. Under the hood, there are significant pockets of stress as the US credit cycle bites.
- US: Labor strength is eating into profit margins, which eventually forces corporates to lay off workers once the margin erosion becomes too painful.
- China: Growth and inflation LEIs remain weak as the economy follows an L-shaped path out of recession. Incremental policy support will boost excess liquidity (which is bullish for equities).
- Eurozone: Cyclical disinflation is clear across most leading data, with key subcomponents like services also set to roll over more sharply.
- Commodities: cyclical demand headwinds remain, but supply conditions remain very tight in our favored energy and copper markets.
CyclicalLeading Indicator WatchRecessionCommoditiesChinaUSEurozone
