the Ishaares 20+ Treasury year (TLT) Today, the treasury revenue is expected to decrease that investors expect the US economy to weaken during the second half of 2025. This reaction follows the issuance of the leading economy index in June (LEI), which decreased by 0.3 % after flat reading in May, and decreased by 2.8 % during the first half of the year, and more than twice the pace during the second half of 2024.
Although the strong market rally is limited to falling, the deeper direction indicates the basic economic stress.
“The United States has decreased in June,” said Justina Zabinska La Monica, the first director of the business course indicators at the Board of Directors. “For the second month in a row, the stock rate gathering was the main support for LEI. But this was not enough to compensate for the very low expectations of consumer, the new requests for manufacturing and a third consecutive month of high demand for unemployment insurance.
TLT increased by 1.3 % sharp during the middle of the day after the report, while stocks resumed their upward path with the S&P 500 0.5 %.
Although the S&P 500, which presses its highest fresh levels, which have been moved by the tumultuous stock momentum, the LEI components tell a different story.
Weak consumer confidence, new, soft orders in manufacturing and a height of initial unemployment claims were largely weighed on the index. This difference led to TLT investors expecting an economic withdrawal in the back half of the year, while stock markets continue to rise, apparently climbing a wall of anxiety, as the stock market agent Vanguard S & P 500 ETF (VOO) 27 % has gathered a post -resettlement day.
source: Etf.com and FactSet data. Price returns over one year annual. All returns are the total returns unless it is stated otherwise.
It is now the main concern of the American definitions on August 1, which can push import prices up, inflation and pressure on consumers. Since consumer spending represents nearly two -thirds of the US GDP, the weakest demand for the family due to high prices can slow the economy.
With commercial issues that have not been resolved and the risks of tariffs on the horizon, bond markets are already pricing in slower growth – while stocks maintain their calmness.
Although Lei is not an ideal prediction tool, it is a widely respected main stagnation indicator, usually ranges between six to 12 months.
The “3DS” test of the Conference Council, which is looking for spread and growth for a period of six months, has indicated the recession signal: The spread is still less than 50, and the index contracted more than 4.1 % annually.
Historically, these readings often precede the economic slowdown. This indicates that LEI today weakens investor confidence in the long market power.
Lei has a strong historical record of its peak and decline before recession. Fixed decreases over the course of several months, especially when the growth rate decreases for a period of six months to less than a specific threshold and the spread index (with reference to the extent of the spread of declines between the components) less than 50, and often precedes economic shrinkage.
By combining 10 different indicators covering different aspects of the economy (for example, manufacturing, employment, housing, financial markets, consumer expectations), Lei provides a more comprehensive and reliable signal than any one indicator alone.
As a “pioneering” index, the explicit purpose is to expect the turning points in the work cycle, providing an early warning system for investors, companies and policy makers.
Although it is often accurate, the Lei is not infallible. There were cases in which Lei referred to a possible contraction but did not follow the recession, and it is sometimes referred to as “false positives”. This can happen if the basic economic conditions are transformed or if other factors reduce the LEI signal.
Moreover, LeI does not provide details about the intensity, duration of stagnation or possible expansion, and is subject to reviews.
Lei should always be used in conjunction with other economic indicators and market analyzes. Dependence only on LEI can lead to incomplete or misleading conclusions. For example, some critics argue that it may be excessively biased towards the goods sector and may not completely capture the dynamics of the economy dominated by services.
Although LEI is not guaranteed, its historical reliability during the decreases for a period of six months and the low proliferation readings highlight the potential market risk over the next six to 12 months, and thus the high price of TLT on Monday reflects investor expectations for slower growth during the second half of 2025, despite the strong stock market.
The return of definitions on August 1 can enhance this slowdown through inflation, which may lead to slower spending on consumers, and an economic engine for American economies and global economies.
In short, while the markets are falling, economic indicators such as Lei suggest that the warning lights are flashing. Maintaining wallets can be balanced and flexible in the coming months.
Release responsibility: This article is for media purposes only and does not constitute financial advice. Investing in the circulating investment funds includes risks, and investors must carefully consider their investment goals and bear risks before making any investment decisions.
At the time of publication, Kent Thune did not occupy a position in any of the above -mentioned securities.
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