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U.S. economic data continue to surprise on the upside, and recent market action in bond and currency markets suggests global investors are banking on a sustained resurgence in the world's largest economy. A glance at the most forward-looking indicators of U.S. expansion, namely new orders in manufacturing and non-manufacturing businesses, provides further evidence that the U.S. economy is improving rapidly.

The Citigroup U.S. Economic Surprise Index, which measures economic data relative to economists' estimates, has made a sharp 50 point jump to +38 since the beginning of August. The ten-year Treasury yield and the U.S. trade-weighted dollar started the month slowly, but have become extremely strong in recent sessions.

Both the bond and currency moves support the thesis that a U.S. recovery is well under way. Higher bond yields imply expectations for rising economic activity and thus growing inflation pressure. The stronger greenback indicates a larger number of investors choosing U.S. assets over global comparables.

New orders data, considered one of the best forward looking economic indicators (enough to be included in the Index of Conference Board index of Leading Economic Indicators), also contribute to bullish conclusions. The ISM Manufacturing New Orders Survey for July made a seven point jump to 58.3 (above 50 indicates growth) and the Non-Manufacturing report showed an almost five point climb to 57.7.

An American economic renaissance is not yet a foregone conclusion. The Conference Board Leading Credit Index – another important leading indicator – remains mired neared generational lows. But the bulls can easily explain this as a hangover from the financial crisis.

Most signs for the U.S. economy are not only positive but also improving, despite weak credit creation. I'd encourage Canadian investors who maintain low U.S. dollar weightings in their portfolio to go bargain hunting south of the border.

Scott Barlow is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here to read more of his Insights, and follow Scott on Twitter at @SBarlow_ROB.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 4:10pm EDT.

SymbolName% changeLast
C-N
Citigroup Inc
+0.78%63.24

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