US economic momentum continues to print at a modestly positive level through the end of July, based on a markets-based estimate of macro conditions. The Macro-Markets Risk Index (MMRI) closed at +5.9% yesterday (July 30). The current level is in the lower range for the past year, although MMRI remains comfortably above zero, which implies that business-cycle risk remains relatively low. A decline below 0% in MMRI would indicate that recession risk is elevated while readings above 0% imply that the economy will expand in the near-term future. Analyzing market-price data in the financial and commodities markets with a probit model also suggests that macro risk is low.
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US economic growth rebounded in the second quarter, but the Treasury market isn’t convinced that GDP’s 2.3% advance in the April-through-June period is the catalyst that will bring a rate hike at the Fed’s monetary meeting in September. The benchmark 10-year yield ticked lower yesterday (July 30), settling at 2.28%, according to Treasury.gov data. That’s a touch below Wednesday’s close and well below the recent high of 2.50% that was briefly touched in June.
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● US Q2 GDP rises 2.3%…
● The Q2 gain keeps a September interest rate hike in play…
● But some analysts are looking past September for first rate hike…
● Meanwhile, US jobless claims tick up from four-decade low…
● And Bloomberg’s Consumer Comfort Index tumbles to lowest level since Nov…
● While 1-year inflation in Europe stays mildly positive and jobless rate is elevated but stable.

The US economy revived in this year’s second quarter, according to today’s preliminary GDP estimate from the government. The 2.3% increase in output in Q2 vs. the previous quarter (real seasonally adjusted annual rate) is a modest pace, although the advance offers an encouraging improvement over Q1’s tepid 0.6% rise.
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The usual routine is on hiatus while The Capital Spectator takes a holiday by way of a slow boat to Bermuda. Your seafaring editor returns as a landlubber on Monday, August 3, when the focus on macro and finance resumes anew.

Meantime, fair winds to all…

● The Global Economy in Turbulent Times
By See-Yan Lin
Summary via publisher (Wiley)
In Global Economy in Turbulent Times, Harvard economist Dr. See-Yan Lin offers his timely and incisive views on today’s key economic issues. Adapted from his hugely popular column in the Malaysia Star newspaper, these articles offer fresh and entertaining perspectives on perennial economic problems. The discussion covers the world economy, with particular attention to the US, EU, Japan, and the international monetary system, as Dr. Lin explains how the economy is broken and offers multiple paths to repair. Coverage includes emerging East Asia, ASEAN (especially Malaysia), and BRICS nations, plus the author’s own views on global demography, the need for quality education, corporate governance in Malaysia, and more.
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Manufacturing activity picked up a bit this month, according to July’s flash estimate of the sector’s purchasing managers’ index (PMI). The sentiment benchmark inched up to 53.8 after June’s 53.6 reading—a 20-month low. Any value above the neutral 50 mark represents growth. Today’s update still shows this cyclically sensitive sector in a relative funk compared with last year’s pace. Yet it’s also clear that the early data for this month suggests that manufacturing remains firmly in an expansion mode, albeit at a subdued rate.
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Next week’s “advance” GDP report (due on July 30) for the second quarter is projected to show that the US economy increased 1.9% (seasonally adjusted annual rate),  based on The Capital Spectator’s average estimate for several econometric-based forecasts. Today’s updated average forecast, which is slightly above last month’s Q2 estimate, marks a rebound after Q1’s 0.2% decline.
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There’s precious little hard data at this point for profiling the US economy in July, but the preliminary numbers so far suggest that growth will prevail and the manufacturing sector’s recent weakness will give way to a modestly stronger trend. We’ll know more when we see today’s flash July data for the US manufacturing purchasing managers index (PMI), scheduled for release at 9:45 am eastern–the consensus forecast sees the moderate growth rate in June ticking up slightly, according to Econoday.com. Meanwhile, the available July figures at the moment imply that the stronger pace of growth in June will carry over into this month.
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● US jobless claims fall to lowest level since 1973…
● US leading index rises more than forecast in June…
● Chicago Fed Nat’l Activity Index rebounds in June…
● But Bloomberg’s Consumer Comfort Index slides to 5-week low…
● Flash Eurozone Composite PMI dips in July, but still near 4-year high…
● While China Mfg. PMI reflects another month of contraction in July.