Citi US Economic Surprise Index nears positive territory

The Citi US Economic Surprise Index is an important tool that tracks how actual economic data compares to what experts expect. The index increases when economic reports, like employment or retail sales, perform better than forecasts. Conversely, it decreases when the data falls short of expectations. A positive index means the economy is doing better than anticipated, while a negative one suggests worse performance. Recently, the index had been declining since mid-January due to economic uncertainty following the onset of tariffs by former President Trump. However, it has started to rise again and is approaching positive territory. This improvement in data has eased concerns about economic growth, leading to a recovery in the US stock market. The index's shift has also affected credit spreads, which is the difference in yield between corporate bonds and safe U.S. Treasuries. A widening of these spreads often indicates that investors see a higher risk of default, suggesting economic troubles. However, if credit spreads narrow, it indicates greater investor confidence and a reduced perception of risk. Thus, the connection between credit spreads and stock market performance shows that improving economic data can lead to higher stock prices, while uncertainty can have the opposite effect.