What's Moving Markets?

Slowing But Growing Economy

This publication is a short excerpt from our weekly Prometheus ETF Portfolio note. While we reserve our forward-looking views on macro and portfolio construction to paid subscribers, we offer our high-level diagnostic of macro conditions here as we aim to offer value to the broader public.

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Let us dive into our assessment of macroeconomic conditions:

• Over the last week, markets moved back towards pricing in a rising growth real growth and liquidity environment. Inflationary pricing has receded, consistent with a slowing but growing economy.

• This transition brings fundamental and market data further in sync, suggesting the durability of this regime. These dynamics, if sustained, favor the combination of stocks and bonds.

• This week, economic data momentum remained unchanged as opposing macroeconomic data kept conditions unchanged. These conditions remain consistent with a slowing but growing economy.

Let's dive into the data driving our assessment before moving on to positioning. Over the last week macro asset markets rose in aggregate. Stocks saw the smoothest path of returns, followed by bonds. Commodities and gold suffered losses.

Economic data momentum remained flat this week, driven by mixed data from manufacturing, employment and construction. The broad trend in data remains consistent with a growing but slowing economy.

For a further understanding of how economic dynamics have been priced into markets, we show our tracking of market-implied macroeconomic regime probabilities.

Markets have moved back towards pricing in a rising real growth and liquidity environment. Inflationary pricing has receded, consistent with a slowing but growing economy. We allocate accordingly. Until next time.