Leading Indicator

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Definition of 'Leading Indicator'

A leading indicator is, as the name suggests, an economic factor that changes before the economy and business cycle start to follow a different pattern or trend. This indicators are used to predict changes in the economy and business cycle. Like all indicators, these indicators are not always accurate.

Bond Yields are often watched and viewed as leading indicators because traders push the bond prices (which effects the yield) according to where they anticipate the trend in the economy to be heading.

Compare to Lagging Indicator, Coincident Indicator, and other Economic Indicators.

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