This tag gathers the analysis of leading signals of economic activity: PMIs, confidence surveys, economic surprises, financial conditions, composite indicators. These data help anticipate cyclical inflections before they appear in official statistics. It covers the reading and interpretation of these signals.
Five recurring errors corrupt the reading of the economic cycle: reacting to isolated figures, conflating correlation and causation, extrapolating from two points, ignoring revisions, and treating lagging indicators as leading signals. They rely on real data interpreted out of context — and trip up professionals as routinely as amateurs.
Markets price on a 12 to 18-month horizon while the real economy moves over years. The mismatch is structural, not cyclical — and it is the most reliable source of false cycle signals.
Confidence surveys measure a climate of opinion, not activity. The correlation between business sentiment and six-month-ahead GDP has fallen from 0.72 to 0.41 across OECD economies between 2010-2019 and 2020-2025 — a structural break that changes how these tools should be weighted in cycle diagnosis.
Leading indicators flag changes in conditions, not turning-point dates. The 22-month US yield curve inversion since 2022 shows how the same signal can fire for two different macroeconomic stories — and why directional convergence matters more than any single component.
Monthly data often provide a misleading picture of the economy due to volatility, statistical noise, and frequent revisions. Monthly data releases drive economic news flow and capture market attention. Their frequency gives them a level of importance that is often…
Equity ETF flows are an early barometer of investor positioning and the gradual return to risk. After a phase of balancing between equities and bonds, recent reallocations point to a renewed appetite for risky assets — but not in an…
The statistical construction of macroeconomic indicators gives them a structural lag that limits their ability to reveal the cycle in real time. Macroeconomic indicators are often interpreted as direct signals of the state of the economy. In reality, their statistical…
Five families of indicators—real rates, the yield curve, credit spreads, implied volatility, and net liquidity—concentrate most of the macroeconomic information that actually matters for financial markets. Their interpretation is grounded in identifiable mechanisms, not intuition. Macro-financial data does not speak…
Stocks rise as the economy slows; they fall on strong data. The 'disconnect' is not a malfunction — it is the mechanical consequence of comparing a leading indicator (prices) with lagging ones (GDP, employment). Credit, liquidity, and expectations move first.
