US economic output remains on track to rebound in the second quarter following the slight decline in Q1, based on the median estimate for a set of GDP nowcasts compiled by CapitalSpectator.com.
Macro Briefing: 20 May 2025
The US Leading Economic Index fell sharply in April, dropping for a fifth straight month, the Conference Board reported. “The US LEI registered its largest monthly decline since March 2023, when many feared the US was headed into recession, which did not ultimately materialize,” said Justyna Zabinska-La Monica, senior manager, business cycle indicators, at the consultancy. The six-month growth rate for the index declined further in April, but remained slightly above the recession signal threshold.
All The Major Asset Classes Posting Gains In 2025 After Latest Rally
Market sentiment has been a wild ride in recent months, but for the moment investors are breathing a sigh of relief, based on a set of ETFs tracking the major asset classes for year-to-date returns through Friday’s close (May 16).
Macro Briefing: 19 May 2025
US Consumer Sentiment Index dropped to second-lowest level on record in May, based on polling by the University of Michigan. The caveat is that most of the survey was conducted before the US and China agreed to a 90-day pause on most tariffs. “Tariffs were spontaneously mentioned by nearly three-quarters of consumers, up from almost 60% in April; uncertainty over trade policy continues to dominate consumers’ thinking about the economy,” Joanne Hsu, director of the Surveys of Consumers, advised.
Book Bits: 17 May 2025
● Capitalism and Its Critics: A History: From the Industrial Revolution to AI
John Cassidy
Review via The New York Times
Trump makes a few cameo appearances in John Cassidy’s new book, “Capitalism and Its Critics,” for his demonstrated ability to brag about his riches while tapping into growing discontent with the global capitalist system. Some of the critics Cassidy features in this book wanted to replace capitalism entirely; others, like Trump, have sought to preserve a core of self-interest while remaking capitalism’s rules. Rejecting a world financial order fueled by free trade and a bedrock American dollar, the president has been promoting a grab bag that includes both tariffs and crypto — a Trumpian hybrid of the very old and the very new.
Research Review | 16 May 2025 | Asset Allocation
Rethinking the Stock-Bond Correlation
Thierry Roncalli (Amundi Asset Management & University of Evry)
February 2025
The stock-bond correlation is a basics of finance and is related to some of the fundamentals of asset management. However, understanding the stock-bond correlation is not easy. In this presentation, we answer the following questions What is the natural sign of the stock-bond correlation? Why do some investors prefer a positive stock-bond correlation while others prefer a negative stock-bond correlation? How does the stock-bond correlation relate to the theory of risk premia? What is the leverage effect of correlation? What are the conditions for negative stock-bond correlation? What are the implications for strategic asset allocation (SAA) and tactical asset allocation (TAA)?
Macro Briefing: 16 May 2025
US retail sales slowed to a fractional gain April, rising 0.1% after surging in March, reportedly fueled by front-running purchases to avoid tariffs. Core sales, which excludes several volatile categories and factors into the gross domestic product (GDP) reading for the quarter, fell 0.2%. “We are now witnessing the first-order effects of tariffs on the economy through reduced spending,” said Tuan Nguyen, a US economist at RSM US. “While a recession is no longer our base case over the next 12 months due to the recent reduction in tariffs, the likelihood has increased that the US economy will experience several quarters of sluggish growth.”
Foreign Bonds Lead US Fixed Income By Wide Margin In 2025
Global diversification for bonds has been a tough sell in recent years, but 2025 is another story. Year to date, fixed-income securities ex-US are outperforming the investment-grade US benchmark for bonds by a hefty degree, based on a set of ETFs through Wednesday’s close (May 14).
Macro Briefing: 15 May 2025
10-Year US Treasury Yield ‘Fair Value’ Estimate: 14 May 2025
The US 10-year yield was steady in April in terms of the market premium relative to a “fair value” estimate. The 10-year yield’s monthly average last month remained mostly unchanged at roughly 40 basis points-plus over the average fair value via three models run by CapitalSpectator.com.