The three-month average of the Chicago Fed National Activity Index (CFNAI) is expected to decelerate to a +0.31 reading in the January update that’s scheduled for release on Monday (Feb. 23), based on The Capital Spectator’s median point forecast for several econometric estimates. The projection is modestly below the +0.39 reading for December, which reflected a strong above-average pace of economic growth for the US relative to the historical trend. Only negative values below -0.70 indicate an “increasing likelihood” that a recession has started, according to guidelines from the Chicago Fed. Using today’s estimate for January as a guide, CFNAI’s three-month average is expected to remain at a level that’s historically associated with growth at an above-trend pace.
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US Treasury yields are trending higher again, buoyed by upbeat economic news in recent days — on both sides of the Atlantic. Low inflation may persuade the Federal Reserve to delay its first round of rate hikes, but a generally positive run of macro data in recent days has refocused the bond market’s attention on the potential for tighter monetary policy later this year.
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● US Jobless Claims Fall to 283,000 in Latest Week | WSJ
● U.S. leading indicator points to moderate growth | Reuters
● Eurozone PMI: Private Sector Growth Hits 7-Month High In Feb | Markit
● Germany PMI: Private-sector growth accelerates to 7-month high | Markit
● Japan PMI: Solid production growth sustained at manufacturers | Markit

The broad trend for the US economy continued to show resilience in the first month of 2015. Despite the upbeat news, the outlook is one of cautious optimism. Any number of potential hazards simmering in the global economy may bring headwinds down the road. Meantime, there are risks lurking within the US, including a wobbly real estate market and the ongoing labor dispute at West Coast ports that’s starting to pinch the nation’s maritime economic activity. Based on the current data set through January, however, positive macro momentum for the US was intact .
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● Greece Loan Extension Revives Wrangling Over Aid Terms | Bloomberg
● Russia’s Putin ‘real and present danger’ to Baltics – British minister | Reuters
● US producer prices plunged in Jan because of cheaper gas and oil | LA Times
● US port dispute is felt all along West Coast | LA Times
● Fed Minutes Show Reluctance To Raise Interest Rates Just Yet | RTT

Today’s US updates for residential housing construction and industrial production fell short of expectations for the monthly comparisons, but the year-over-year trends are looking brighter. The January release on industrial activity is especially encouraging. It all adds up to a change for the better for anticipating that business cycle risk in the US will remain low for the foreseeable future.
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Real estate investment trusts (REITs) continue to hold the pole position among the major asset classes for the trailing one-year period, although the sizzling returns of late have cooled a bit in recent weeks. Vanguard REIT (VNQ) is higher by a strong 26.5% on a total return basis through yesterday (Feb. 17), based on the trailing one-year period (defined here as the past 250 trading days). That’s an impressive gain, but it’s moderately softer than the advances we’ve seen earlier this year.
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● Greek deal hopes boost Europe’s stock markets | MarketWatch
● Greece asks for extension; ECB to make crucial bank funding decision | Telegraph
● U.K. Oct-Dec Jobless Rate Falls Unexpectedly | RTT
● Confidence Among U.S. Homebuilders Declines to Four-Month Low | Bloomberg
● New York state manufacturing index falls in February: NY Fed | Reuters
● As Rivals Falter, India’s Economy Is Surging Ahead | NY Times

US industrial production is expected to rise 0.3% in tomorrow’s January report vs. the previous month, according to The Capital Spectator’s median point forecast for several econometric estimates. The median prediction reflects a moderate rebound in growth vs. the previous month’s 0.1% decline.
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Housing starts are expected to decrease to an annual pace of 1.075 million in tomorrow’s update for January, according to The Capital Spectator’s median point forecast for several econometric estimates. The projection represents a slightly lower level of residential construction vs. December’s 1.089 million units.
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