J.P. Morgan AM: Near-term recession risks are receding

J.P. Morgan AM: Near-term recession risks are receding

Recession (threat)
Outlook vooruitzicht (21) recessie crisis

The latest business surveys suggest that near-term recession risks are receding, with the US, eurozone and UK composite Purchasing Managers’ Indices rising above 50, into expansionary territory.

In Europe and the UK, falling energy prices have increased business confidence, while US data suggests the economy remains resilient in the face of higher interest rates. This improvement in the economic outlook has led markets to price rates staying higher for longer.

The Federal Reserve are now not priced to cut rates this year. With US 10-year yields approaching 4%, government bonds offer both increasingly attractive income and potential upside if the economy does end up in a recession and interest rates are cut by more than is now priced in.

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