Thursday, November 18, 2010

Leading Economic Indicator

Economic indications have been strengthening going into QE2 (Nov 3, 2010), gains reflected by two strong back-to-back 0.5 percent gains for the Conference Board's index of leading economic indicators (September revised from plus 0.3 percent). A wide yield spread continues to be the biggest positive though to a smaller degree given declines underway in long rates, declines triggered and furthered by QE2. A rise in money supply, also related to QE2, is an increasingly significant plus. Another central positive is the factory workweek, strength that is likely to continue given the uplift underway in the manufacturing sector.

Other readings in today's report include a 0.1 percent uptick in the coincident index, a small gain that follows two unchanged readings in a reminder of the economy's mid-year soft patch and the contrasting acceleration now underway.