Deutsche Bank is warning that the latest US inflation reading has caused markets to price in a 100% risk of a recession hitting before the end of this year. This comes as Michael Kantrowitz, chief investment strategist and head of portfolio strategies at Piper Sandler, warned that the “market is going to continue to struggle” for the next 15 months due to slowing economic growth, slowing earnings, and rising unemployment. In other news, Fed officials have had enough inflation and say they’re willing to get serious in their efforts to reign it in. Because of that, many experts and investors see the Fed raising rates by a full percentage point at its next meeting. Fed Governor Christopher Waller said he expects a 75 basis point increase this month. However, he said that he’s open to a larger move depending on incoming data.
Business Insider/Zahra Tayeb
The market is fully pricing in a US recession by the end of the year as hot inflation grips the economy, Deutsche Bank says
The latest US inflation reading has prompted markets to price in a 100% risk of a recession hitting the economy before the end of the year, according to George Saravelos, global head of currency research at Deutsche Bank.
In a Thursday research note viewed by Insider, Saravelos used the peak in the Fed fund futures curve as a measure for recession expectations. He identified a major shift in the market’s view of when the next recession will hit the economy since February, when investors didn’t expected an economic downturn to materialize until December 2024.
On Thursday however, a day after data showed consumer inflation rising by 9.1% through June, futures traders brought forward the timing of a US recession to January 2023.
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Fox Business/Talia Kaplan
Investors should ‘buckle up’ for long slowdown: Investment strategist
Michael Kantrowitz, chief investment strategist and head of portfolio strategies at Piper Sandler, warned on Thursday that investors should “buckle up” for long slowdown.
He also provided insight into what to expect from second-quarter earnings, arguing that an increasing number of “misses” are expected.
Kantrowitz provided the insight on “Mornings with Maria,” Thursday, following mixed results from JPMorgan and Morgan Stanley as the second quarter earnings season kicked off.
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CNN Business/Julia Horowitz
A truly massive interest rate hike is now on the table
Central banks have made clear that after a sluggish start, they’re serious about putting a lid on inflation. Now, as prices soar even faster than expected, they’re weighing increasingly drastic options.
What’s happening: Investors see a growing probability that the Federal Reserve could hike interest rates by a full percentage point at its next meeting for the first time in the modern era. In June, the Fed raised interest rates by three-quarters of a percentage point, which it hadn’t done since 1994.
US stocks mostly shrugged at the news on Wednesday that consumer prices jumped 9.1% year-over-year in June, a fresh 40-year high and a larger increase than forecast. But policymakers indicated deep concern.
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