May monthly data reported this past week included the Index of Leading Indicators, up 0.1 and showing no imminent recession, the Empire State and Philly manufacturing indexes, both of which improved, consumer prices up slightly, housing starts and existing home sales up, and permits down. The 6 month trend in housing is up, but at a more muted pace than over the previous year.
Prof. Geoffrey Moore identified 4 long leading indicators, which take over a year to feed into the general economy: bond interest rates, real M2 money supply, housing permits, and corporate profits after taxes. Three of the four (using purchase mortgage applications as a reasonable proxy for permits) are updated in our look at the high frequency weekly indicators, so let’s start with them:
Interest rates and credit spreads
- 5.11% BAA corporate bonds up +0.12%
- 2.20% 10 year treasury bonds up +0.08%
- 2.91% credit spread between corporates and treasuries up +0.04%