US Economy Shows Resilience Amid Inflation and Rate Hikes

The US economy continues to show signs of strength, despite rising inflation and interest rate pressures. The weekly indicators, which provide a good nowcast of the economy, remain broadly positive. The SP500 index is one notable example, with its recent performance suggesting ongoing expansion.

However, there are some warning signs on the horizon. The Treasury market has experienced a 'bear steepening', and mortgage rates have increased, indicating expectations for further Federal Reserve rate hikes. This could dampen hopes for a housing recovery.

Despite these concerns, robust profits in AI-related and oil sectors continue to drive short-term economic strength. Additionally, low jobless claims and strong stock prices are contributing factors. Coincident indicators such as consumer spending and steel production are also strong, but softer restaurant reservations hint at possible consumer pressure.