The Milwaukee Company’s Economic Briefing Report is a weekly summary of economic indicators that have the potential of impacting stock and bond markets. Readings associated with a high level of risk for a number of the indicators listed below could suggest an elevated risk of a U.S. recession, and therefore a higher level of market risk.
Comments on this week’s report:
- Treasury yield spreads remain historically narrow with the 10-year minus 2-year spread sitting at 0.16% and the 10-year minus 3-month spread sitting at 0.21%.
- Housing starts plunged to its lowest level in over two years and dropped its year-over-year change from -6.83% to -10.91%. Housing starts should be closely monitored as it heads towards a high level of risk.
- The growth in housing prices (measured by the Case-Shiller Composite Home Price Index) is slowing down as it marks its 9th consecutive monthly drop in its year-over-year rate, yet it still is growing at a fairly strong 4.16%.
- Growth in new orders of durable goods dropped from a trailing twelve-month growth rate of 5.56% to 3.49%, but still indicates a low level of risk.
- The Chicago Fed National Activity Index (CFNAI) for production and income dropped into high risk territory as it fell from 0.8 to -0.45. However, the composite CFNAI three-month moving average still remains at a low level of risk.