That bad news may include a US recession in 2023, although Pease stops short of saying it is likely.
However, there are several headwinds that investors are concerned about including the inverted Treasury yield curve, where the spread between the 10-year yield and the 2-year yield is the most negative in 40 years.
There are also signs that the US economy is softening, such as the Institute for Supply Management’s index for new orders. These metrics may not be central to the Fed’s policy-making which tends to focus on payroll and wages – and may mean further tightening.
“We’re still in the soft/softish landing camp for the U.S., and we expect that strong household and corporate finances can limit the downturn to, at worst, a mild recession,” Pease said.
European crisis
The state of the European economy is cause for concern currently, with the region’s historic reliance on Russian energy a key focus.
