Our real narrow money index continues to decline and is sending an increasingly bearish cyclical signal for the global economy and commodity prices. Our real narrow money index has now declined for 4 months running and is now tracking below 7% for the first time since October 2010.

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This decline is driven by both a decline in nominal money growth as well as a rise in US core inflation which rose into the middle of 2013 after being very weak in the spring. It is obviously not impossible for real money growth to recover from here, but based on past instances real money growth has further room to fall in coming months. Investors should watch this closely in coming months as real money growth remains one of the best medium term leading indicators we have across economies.