Rating: Positive
Stock Market Performance
Why we watch it:
The stock market tends to be forward looking and it is a leading indicator of economic growth.
Recent Highlights:
US equities finished September on a negative note, with the S&P 500 down -0.4%. Domestic mid-cap equities decreased -4.2% and domestic small-cap equities decreased -5.6%. The S&P 500 is up 2.3% over the last three months and up 15.3% over the last 12-months.
The international index (MSCI ACWI ex-US) was down -2.3% in September. The index is up 0.6% over the last three months and up 19.9% over the last 12-months.
US Equities continued to march upwards in Q3, propelled by strong corporate fundamentals and economic growth. Despite Treasury Yields soaring to multi-year highs, ongoing geopolitical concerns, and worries over the sustainability of the AI trade, the S&P 500 closed the quarter up over 2%. Thanks to the tailwind of rising crude oil prices, energy stocks led with a 17% gain, while rate sensitive Utilities were down around -12%. Growth and Value were among the only reported factor indices that posted gains in Q3, while quality was the laggard. The US 10-year yield reached 5.0% for the first time since 2007. Finally, commodities rallied, with the S&P GSCI up 25% in Q3, led by energy, bringing its year-to-date performance to 120%.
Positive Since November 2023
Rating: Positive
Consumer Spending
Why we watch it:
Over 70% of the U.S. economy is based on personal consumption. A reduction in consumer spending will cause slower growth in the economy.
Recent Highlights:
Consumer spending increased 0.9% in August, which was above expectations. Consumer spending can be volatile from one month to the next.
The Final Q2 2026 consumer spending recorded a 3.8% increase, above the second estimate and expectations.
Personal income increased in August by 0.2%, below expectations.
Positive Since June 2022
Rating: Positive
Manufacturing Activity
Why we watch it:
The health of the economy is dependent on the health of the manufacturing sector. Historically, it has been the path to development and an important driver of economic growth. Domestic manufacturing activity is tracked by the Institute of Supply Management (ISM), which releases a monthly index while global activity is tracked by J.P.Morgan and IHS Market in association with ISM and IFPSM. The index monitors data like employment, production inventories, new orders and supplier deliveries. It is based on surveys of more than 300 manufacturing firms, and it’s considered an important economic measure. The index value ranges between 0 and 100. A value below 50 may indicate a slowdown in the economy, especially if the trend persists over several months. A value above 50 likely indicates a time of economic growth. Similarly, Global Manufacturing PMI is produced by IHS Markit in association with ISM and IFPSM. It is compiled by IHS Markit from responses to monthly questionnaires sent to purchasing managers in survey panels in over 40 countries, totaling around 13,500 companies. It has the same value ranges as the ISM manufacturing report.
Recent Highlights:
ISM manufacturing reported 54.5 in September, below expectations. This reading is above the 50.0 break-even point, signaling expansion. New orders reported 55.3, above expectations.
Global PMI posted a reading of 53.0 in September, slightly above August’s 52.3. This reading remains above its 50.0 neutral mark for the 14th consecutive month. Manufacturing production increased at the quickest pace since July 2021, combined with the steepest gain in new business over the last 55 months. Overall output, new orders, employment and stocks of purchases all expanded, while average supplier lead times lengthened. Demand for goods has improved throughout 2026, reflecting the increased demand for AI infrastructure and defense equipment. The sharpest rise in production in September was reported in Thailand, with other strong markets consisting of India, Ireland, Taiwan, and the US. Growth in Midland China was among the strongest we have seen since the COVID-19 pandemic.
Positive Since March 2025
Rating: Negative
Consumer Price Stability
Why we watch it:
Mild inflation is good for the economy, because it promotes consumption without destroying the value of people's savings. If you know something will be going up slightly in price down the road, you'll be more likely to purchase it now. If this effect is mild, it doesn't hurt savings rates very much. Deflation, however, punishes an economy because it hurts consumption. If you know something will be cheaper tomorrow or next year, you're more likely to wait until tomorrow to buy it. The Fed’s inflation target is 2%.
Recent Highlights:
Headline CPI increased 0.4% in August, in line with expectations. Over the last 12 months, CPI rose 3.4%, also in line with expectations.
Core CPI, which excludes food and energy, increased 0.3% in August, which was above expectations. Over the last 12 months, core CPI rose 2.4%. Core CPI over the last 12 months was in line with expectations.
Negative Since: October 2026
Rating: Neutral
Housing Market
Why we watch it:
The economy typically benefits directly and indirectly from increased housing activity. It is estimated that for every $100 in value resulting from housing construction, an extra $40-$80 is added to the economy due to housing-related spending.
Recent Highlights:
Total existing home sales decreased by -2.0% in August to a seasonally adjusted annual rate of 3.98 million units.
The median existing home price in August was $429,100. Unsold inventory is at about a 4.9-month supply. A three to six-month supply is considered a healthy balance between supply and demand.
New home sales increased 6.4% in August to a seasonally adjusted annualized rate of 684,000. The median sale price of new homes sold in August was $393,700. Unsold inventory is at about 8.5-month supply as of August 2026. Note that the new home sales report is typically very volatile and the data is frequently revised.
The 30-year fixed mortgage rate ended September around 7.4%.
Neutral Since October 2022
Rating: Neutral
Volatility
Why we watch it:
VIX is the symbol for the Chicago Board Options Exchange's volatility index. It’s a weighted mix of the prices for a blend of S&P 500 Index options, from which implied volatility is derived. In other words, it measures how much people are willing to pay to buy or sell the S&P 500. The VIX goes up when there’s turmoil in the market, and goes down when investors are content or at ease with the economic outlook.
We like to watch the VIX, because it measures the cost of buying insurance for stock protection (through options). When the cost of protection is high, volatility is usually high, and the potential for declining stock values is higher.
Recent Highlights:
The VIX started September at 14.9 and ended the month at 16.3. Volatility throughout the month of September had some minimal increases but remained relatively stable. The historical average is 19.2.
Neutral Since March 2026
Rating: Positive
TED Spread
Why we watch it:
The TED Spread is the banks’ cost of borrowing short-term money minus the Treasury’s cost of borrowing short-term money. The difference between the three-month SOFR interest rate and the three-month Treasury Bill interest rate measures the degree of riskiness of the bank lending market. When the spread is significant, banks worry about being repaid when loaning money to other banks, thereby creating uncertainty. This can cause slower growth in the economy.
Recent Highlights:
The current spread at the end of September was -0.13% (3-Month SOFR 3.90% – 3-Month Treasury Bill 4.03%, as of October 2026). The current TED spread of -0.13% is well below the historical average spread of about 0.57%.
Positive Since June 2020
