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Highlights
The index of leading economic indicators is pointing to sustained growth through year end but not accelerating growth. The index for March rose 0.4 percent, less than half February's rate of 1.0 percent (revised from 0.8 percent). Jobless claims were a marginal positive in March but, based on month-to-date data, may be a negative for the April report. Building permits were a major plus in March but, in the next report, make for a very tough monthly comparison. On the plus side, consumer expectations, which plunged in March, appear to be rebounding while vendor deliveries, in a sign of economic strength, slowed in March and, based on this month's early indications including today's Philly Fed report, may be slowing further in April. But the greatest pillar for this index is, and probably will continue to be, the rate spread where front rates are low and long rates are high.
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Market Consensus before announcement
The Conference Board's index of leading indicators in February jumped 0.8 percent after edging up only 0.1 percent the month before. Strength was in the interest rate spread (10-year T-note less fed funds), which added 0.36 percentage points, and in a drop in unemployment claims, which added 0.33 percentage points to the leading index. Eight of the 10 components were positive. Looking ahead to March, the decline in jobless claims will likely end up a positive as will the rate spread. But with Treasury yields down on flight to safety, the positive contribution will likely be lower than in February. Also, stock prices, a big plus in February, were down slightly according to the S&P500.
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