More economic indicators are now indicating a moderate level of (and some a high level of) risk as what is anticipated to be a prolonged trade war between the U.S. and China weighs on such indicators as Industrial Production, New Orders of Durable Goods, and Chicago Fed National Activity Index: Production and Income.
Comments on this week’s report:
- The spread between the 10-year treasury yield and the 2-year treasury yield remains vary narrow at 0.19%, while the 10-year minus 3-month spread is inverted at -0.21% and indicates a high level of risk.
- Real GDP (which is adjusted for inflation) was revised slightly downward but continues to grow at a strong year-over-year rate of 3.18%, and does not indicate any sign of risk.
- Core Personal Consumption Expenditures (PCE), a measure of inflation, continues to grow at a relatively low year-over-year rate of 1.57% when compared to the Fed’s 2.0% target, and indicates a moderate level of risk.
- Corporate profits are growing at a very strong 11.15% year-over-year rate, however, this may be overstated due to the -12.70% drop it experienced a year ago (as indicated in its 3-year trend).