Our most reliable leading indicator of U.S. recession is threatening to go negative. Through the end of last week, the 1-year Treasury yield was below the 10-year yield, but the spread had narrowed, which prompted us to change this indicator to yellow from green. This week, the 1-year yield has moved above the longer-term yield; on July 13 the curve inverted by 27 basis points.

We examine the main sticking points for the U.S. and other major economies, including inflation, and what it all means for the outlook for equities.

RBC Global Asset Management chief economist Eric Lascelles discusses the factors behind surging inflation, and the economy’s prospects from here.

Macroscope is our monthly chart book in which we update our thoughts on the US equity market outlook from both a top-down and bottom-up perspective. We review six DRIVERs of performance for a number of dimensions – the S&P 500, stocks vs. bonds, US vs. non-US, Growth vs. Value, S&P 500 sectors, Russell 1000 industries and factors, and Small Cap.