The overall risk of the economy is moderately higher than it has been more recently as the CFNAI three-month average remains below zero and the spread between the 10-year treasury and the 3-month treasury inverts for the first time since 2007 (i.e. before the housing market crash).
Comments on this week’s report:
- Treasury yield spreads remain historically narrow with the 10-year minus 2-year spread sitting at 0.16%. Meanwhile the spread between the 10-year minus 3-month inverted for the first time since 2007 as it dropped from 0.08% to -0.03%.
- The University of Michigan’s Consumer Sentiment Index remains historically high however it has dropped 5.92% over the trailing twelve months, indicating a moderate level of risk.
- Corporate profits have increased at a year-over-year rate of 11.15%, up from 6.15% the month prior and continues to show no sign of risk.
- Housing starts struggle to gain traction as its year-over-year growth rate dropped from -4.57% to -9.92%, marking its fifth consecutive month of negative year-over-year growth.
- The core Personal Consumption Expenditure (PCE) price index, a measure of inflation, recognized a reduction in its year-over-year growth rate, dropping from 1.95% to 1.79%. However, the index still indicates a low level of risk.