As what is anticipated to be a prolonged trade war between the U.S. and China, economic indicators such as Industrial Production, Durable Goods Orders, and the Chicago Fed National Activity Index: Production and Income move from a low level of risk to moderate or even high level of risk (for Industrial Production). However, some of the more prominent indicators such as GDP growth, inflation, and unemployment still indicate a low level of risk.
Comments on this week’s report:
- Treasury spreads remain historically very narrow as the 10-year minus 2-year sits at 0.18% and the 10-year minus 3-month spread sits at 0.0%.
- Growth in new orders of durable goods has changed from a low to moderate level of risk as its year-over-year rate of change drops from 0.82% to -0.05%.
- The St. Louis Financial Stress Index remains near all-time lows at -1.25 (readings below zero indicate below average financial stress) and does not show any sign of risk.
- The Case-Shiller Composite Home Price Index continues to grow at a sustainable 2.63% and currently indicates a low level of risk.