Market Sentiment Tracker: Mixed Signals from Global Economy

We’re entering a phase in the global cycle where the surface is diverging from the structure. The data no longer moves in unison. Industrial orders say one thing; household behavior says another. Confidence is warming in boardrooms while chilling at dinner tables. The result is a global picture that feels less like late-cycle overheating and more like early-cycle hesitation inside a tightening regime. Our latest Market Sentiment Tracker highlights the same.

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United States: Momentum Is Eroding Beneath the Surface

At first glance, the economy still looks solid. Durable goods orders spiked, and jobless claims remain low. But this doesn't mean real growth. It might as well be lag. Beneath the strong headline data, the U.S. consumer is signaling fatigue . Real personal consumption is falling, income is down, and new home sales collapsed 13.7%. Confidence metrics are deteriorating even as the Fed holds rates near cycle highs.

What's happening? The policy lag is biting , and households are adjusting expectations. The market is holding out hope for a Q3 Fed pivot, but the data shows something else: a soft-landing narrative with shrinking support . Unless income growth revives or the labor market softens in a controlled way, the second half risks sliding into stagnation—quietly, but definitively.

Europe: Sentiment Is Stabilizing, But There’s No Spark

European business sentiment is off the lows—Germany’s Ifo ticked up, Spain's retail sales surprised—but it’s not translating into real demand strength . Retail activity in Germany declined again, French consumer confidence is stuck, and car sales are collapsing. The ECB has paused rate hikes, but there’s no growth engine kicking in .

What we’re seeing is a post-tightening Europe that’s adjusting but this isn't translating into growth right now. Inflation has cooled, but so has momentum. Corporate credit growth is mildly improving, but the consumer is still reluctant. With little room for fiscal push and waning global demand, Europe risks drifting into low-intensity stagnation —not crisis, but chronic underperformance.

China: The Illusion of Stability Is Wearing Thin

China’s June PMIs barely held above water, but profitability continues to fall . Industrial profits down -1.1% YTD is the real story—it shows that while the state can stabilize activity, it hasn’t restored confidence or margins. Consumers aren’t spending, private firms aren’t investing, and Beijing still resists large-scale stimulus.

Our recent MSTs have shown that without real progress, China's growth will plateau. Global investors hoping for a second-half rebound may be overestimating the government’s appetite for risk. Right now, they seem content with "no crisis"—even if it means no real growth either.