Leading Indicators: Slow-ride, Take it Easy

Daily Forex Fundamentals | Written by Wachovia Corporation | Jul 21 08 14:47 GMT |

The index of Leading Economic Indicators (LEI) slipped 0.1% in June as a contraction in the money supply and losses in equity markets overcame positive contributions from the interest rate spread and an upswing in building permits. The message from LEI is essentially unchanged for the last four months: expect painfully slow growth. LEI Weak in June, But it Could Have Been Worse The LEI was off 0.1 percent in June; the index has not moved more than 0.2 percent in any direction since January. The largest positive contributor in June came from a surprise increase in building permits - a one-time pop having to do with a change in the NYC building code. We do not expect building permits to be a bright spot again anytime soon. Coincident Index has Stalled, Slow Money Growth The coincident index has been virtually flat every month since February. In June, the coincident index was helped by industrial production, but weighed down by employment. As the Federal Reserve has left interest rates unchanged, and as banks have implemented tougher lending standards, we are in a period of slow money growth. Wachovia Corporation http://www.wachovia.com Disclaimer: The information and opinions herein are for general information use only. Wachovia Corporation and its affiliates, including Wachovia Bank, N.A., do not guarantee their accuracy or completeness, nor does Wachovia Corporation or any of its affiliates, including Wachovia Bank, N.A., assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice, are for general information only and are not intended as an offer or solicitation with respect to the purchase or sales of any security or any foreign exchange transaction, or as personalized investment advice. Securities and foreign exchange transactions are not FDIC-insured, are not bank-guaranteed, and may lose value.