The overall risk of the U.S. economy to experience a near-term recession remains moderately low. However, narrow treasury spreads, a slowdown in Industrial Production, and lower trending CFNAI indicate that the U.S. economy may be entering a late-cycle phase.
Comments on this week’s report:
- Treasury spreads were little changed on the week with the 10-year minus 2-year falling from 0.26% to 0.25% and the 10-year minus 3-month increasing from -0.02% to 0.02%.
- The CFNAI three-month moving average extends its streaks of below zero readings to five (months) as it rises from -0.27 to -0.26, which currently indicates a moderate level of risk.
- U.S. housing starts dropped by nearly 1.0% in June while its year-over-year growth rate jumped from -5.03% to 6.19% and currently indicates a low-level of risk, however it should be noted that housing starts tend to be volatile.
- The St. Louis Fed Financial Stress index continues to trend towards an all-time low as it falls from -1.38 to -1.36 and currently indicates a very low level of risk.