Summary

• High frequency indicators can give us a nearly up-to-the-moment view of the economy.
• The metrics are divided into long leading, short leading, and coincident indicators.
• Short leading and coincident indicators have been improving weekly since April, and continued this week.
• Long leading indicators remain very positive.
• But the resurgence of coronavirus infections and new restrictions in activity placed in response to that resurgence seem likely to bring an end to that trend.

Purpose

I look at the high frequency weekly indicators because while they can be very noisy, they provide a good nowcast of the economy and will telegraph the maintenance or change in the economy well before monthly or quarterly data is available. They are also an excellent way to "mark your beliefs to market." In general, I go in order of long leading indicators, then short leading indicators, then coincident indicators.

A note on methodology

Data is presented in a "just the facts, ma'am" format with a minimum of commentary, so that bias is minimized.

Where relevant, I include 12-month highs and lows in the data in parentheses to the right. All data taken from St. Louis FRED unless otherwise linked.

A few items (e.g., Financial Conditions indexes, regional Fed indexes, stock prices, the yield curve) have their own metrics based on long-term studies of their behavior.

Where data is seasonally adjusted, generally, it is scored positively if it is within the top 1/3 of that range, negative in the bottom 1/3, and neutral in between. Where it is not seasonally adjusted, and there are seasonal issues, waiting for the YoY change to change sign will lag the turning point. Thus, I make use of a convention: data is scored neutral if it is less than 1/2 as positive/negative as at its 12-month extreme.

With long leading indicators, which by definition turn at least 12 months before a turning point in the economy as a whole, there is an additional rule: data is automatically negative if, during an expansion, it has not made a new peak in the past year, with the sole exception that it is scored neutral if it is moving in the right direction and is close to making a new high.

For all series where a graph is available, I have provided a link to where the relevant graph can be found.

Recap of monthly reports

May data included an increase in new home sales, but a decrease in existing home sales. Total and core durable goods orders both rose. Consumer sentiment as measured by the University of Michigan fell slightly from mid-month but was higher month over month. Personal consumption expenditures rose sharply, but income fell sharply (although it was still well ahead of March). Wholesale and retail inventories both declined sharply.

NOTE: For many indicators, I have added the week of the worst reading since the coronavirus crisis began in parentheses following this week's number. The first indication of bottoming will be when these comparisons get "less worse," and a bottom will probably be in when the comparison improves by about 1/2).

Long leading indicators

Interest rates and credit spreads

Rates

• BAA corporate bond index 3.60%, up +0.03% w/w (1-yr range: 3.29-5.18)
• 10-year Treasury bonds 0.64%, down -0.05% w/w (0.54-2.79)
• Credit spread 2.96%, up +0.08% w/w (1.96-4.31)

(Graph at FRED Graph | FRED | St. Louis Fed )

Yield curve

• 10-year minus 2-year: +0.47%, down -0.03% w/w (-0.04 - 0.67) (new one-year high)
• 10-year minus 3-month: +0.50%, down -0.04% w/w (-0.52 - 0.70)
• 2-year minus Fed funds: +0.12%, down -0.02% w/w

(Graph at FRED Graph | FRED | St. Louis Fed )

30-Year conventional mortgage rate (from Mortgage News Daily) (graph at link)

• 2.96%, down -0.05% w/w (2.94-4.63)

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