Recent Updates
- Mexico: Manufacturing Employment (Mar)
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Economy in Brief
U.S. Mortgage Applications Continued to Slide Amid Higher Rates
The biggest declines have been in refinancing activity, while applications for purchase are just starting to crack...
UK Inflation Jumps
Inflation is at the highest rate since the series began in January of 1989...
U.S. Industrial Production Much Stronger than Expected in April
The increase in manufacturing output in April was once again led by motor vehicle and parts production...
U.S. Retail Sales Posted Solid Rise in April
Notwithstanding falling real incomes and declining confidence measures, consumer spending posted a solid increase...
U.S. Home Builder Index Took a Steep Drop in May
This is the fifth straight month that builder sentiment has declined...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
Profits and Margins Plunge In Q1: Expect More Margin Contraction As Fed Squeezes Inflation
The Many Links of Inflation Cycle: Hard Landing Is Needed to Crack Them
Peak Inflation & Fed Policy: A Relationship Which Should Worry The Fed And Scare Investors
Why Have the Yields on TIPS Been Negative in the Past Two Years?
by Andrew Cates March 11, 2022
Figure 1: Latest sentix survey suggests incoming economic data could disappoint
If geopolitical stress endures and food and energy prices continue to climb global recession risks will surely rise. The latest sentix survey, published earlier this week, certainly suggests growing alarm about this potential outcome amongst global investors. The forward looking expectations index, for example, from the global survey slumped (to -8.8 in March from +14.6 in February) largely thanks to a plunge in European confidence but also because of sliding confidence in other major regions. This survey is more forward looking than most. And as the chart above suggests it points to a flurry of disappointing global economic data in the immediate weeks ahead.
A key issue that investors will be mindful of in gauging recession probabilities concerns the interplay between financial instability and economic instability. Most recessionary phases, after all, are preceded by heightened financial market stress.
A useful indicator to monitor that stress is the Office of Financial Research’s global financial stress index. As the chart below suggests this has crept up into “stressed” territory in recent days thanks to heightened volatility and generic weakness in global equity and credit markets. While the index is not yet in “recession” territory it certainly bears watching closely in the days and weeks ahead.
Figure 2: The OFR index has climbed into stressed territory
Viewpoint commentaries are the opinions of the author and do not reflect the views of Haver Analytics.