Bank Credit Analyst Research finds that global economic momentum is already beginning to cool, led by the U.S. economy.

The firm reports that its Global Leading Economic Indicator edged lower in May, “dipping below the boom/bust line and continuing the downtrend that has been underway since January.”

“The weakness is concentrated in the U.S., where an erosion in housing is beginning to feed through into the overall economy. However, our global ex-US measure is also drifting lower, suggesting the recent string of strong data will soon give way,” it says. “It also underscores that the rest of the world will struggle to sustain momentum as the US slows, especially given tightening monetary policy and high energy prices.”

“The silver lining as global growth decelerates is that inflationary pressures should abate and calm fears of excessive monetary tightening,” BCA adds. “The downside is that growth-sensitive assets such as commodity prices and emerging market and small cap stocks will remain under pressure.”