Slowdown Signals????????

The Daily Shot apparently had a note on U of M Consumer Expectations vs Current Conditions.  As can be seen on the top chart, everyone’s happy with ‘Current Conditions’ but there’s not as much enthusiasm for future expectations.  On the lower chart, the white line is the SPREAD between the UofM current conditions vs expectations; it becomes more negative as future expectations lag.  Sort of a grasshopper and ant fable…having fun now but borrowing from the future.  I have overlaid the 2/10 yield curve spread (in amber) on the confidence spread.  Perhaps unsurprisingly, these two roughly move together directionally.  Makes sense, the flatter curve typically results from the Fed hiking rates which slows the economy.  Recently there has been spirited debate about whether or not a flattening curve signals slower growth and a possible recession, with some, including Bernanke, indicating that the curve now has less predictive power.  However, the “social science” spread of current conditions to expectations is also near its low.  Corroborating evidence???


Posted on August 1, 2018 at 3:05 pm by alexmanzara · Permalink
In: Eurodollar Options

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