Labor Market
Over the past few weeks, global equities have been hit by rising scepticism over the bullish AI narrative and increasing concerns over global growth. Stocks should stabilize in the near term, but the medium-term direction is to the downside. We expect the S&P 500 to drop to 3750 in 2025 and the 10-year Treasury yield to fall to 3%.
The ISM services PMI surprised positively in July. The headline index expanded 2.6 ppts to 51.4, reversing May’s fastest pace of contraction in four years. Notably, the business activity subcomponent increased 4.9 ppts to 54.5, new orders and new export…
According to BCA Research’s US Bond Strategy service, Friday’s employment report caused financial markets to price-in some recession risk for the first time in months. The Treasury curve bull-steepened in July, a move that accelerated after Friday’s negative…
Our Portfolio Allocation Summary for August 2024.
We have previously highlighted that an upside surprise in China’s fiscal stimulus as well as an AI-triggered jump in US productivity could potentially prolong the expansion, and constitute two key risks to our recession view. Recently announced government…
July nonfarm payrolls expanded by 114 thousand workers, a sharp slowdown from June’s downwardly revised 179 thousand, and significantly disappointing expectations of 175 thousand. The unemployment rate unexpectedly edged 0.2ppt higher to 4.3% in July,…
The Sahm Rule – a widely watched real-time recession indicator – signals the early stages of a recession when the 3-month moving average of the unemployment rate rises at least half a percentage point above its past 12-month low. The surprise rise in the…
According to BCA Research’s Global Asset Allocation service, there are clear signs that growth is weakening. BCA’s Global Nowcast has been slowing for three months. Behind this slowdown is the fact that the US consumer – the biggest factor keeping growth…
The market is pricing in a soft landing, but we see growing signs that the global economy is faltering. Investors should be defensively positioned.
FOMC members unanimously voted in favor of keeping rates on hold in July but signaled that a September cut is on the table. Inflationary pressures have indeed continued to ease over the past several months. Notably, the Employment Cost Index (ECI) – the…