Recession-Hard/Soft Landing
After holding rates steady over the past nine months, the ECB delivered on its widely expected rate cut on Thursday. The Governing Council lowered all three key ECB interest rates by 25 bps, bringing the refinancing, marginal lending facility and deposit…
BCA’s Global Leading Economic Indicator has had a good track record of predicting year-on-year changes in the IMF global real GDP growth series. This GDP-weighted average of the standardized leading indicators of 23 DM and EM economies bottomed in early 2023,…
The ISM Services PMI largely surpassed expectations in May. The headline index grew by 4.4 ppt to 53.8, returning to expansion following April’s one-month contraction. Double-digit jumps in new export orders (13.9 ppt) and business activity (+10.3 ppts) drove…
The Bank of Canada reduced its policy rate by 25 basis points from 5% to 4.75% on Wednesday, in line with the market consensus. Headline inflation and the BoC’s preferred measures of core inflation are within the BoC’s target range of 1-3%, and shorter-term…
US job openings softened from 8.5 million in March to 8.1 million in April, below expectations of 8.4 million, and the lowest level in three years. Healthcare and social assistance, as well as leisure and hospitality, drove the decline while openings in the…
The moderation in core PCE in April was a step in the right direction towards a Fed easing. Our Global Investment Strategists also highlighted that outside of a few pandemic-related “catch-up” categories such as shelter, health care, and auto insurance, CPI…
Consumption accounts for two-thirds of the US economy, and our recession view relies heavily on the deteriorating outlook for US consumers. That said, dissecting US GDP into its components reveals that consumption tends to merely stabilize during…
Corporate and junk bonds are the fixed-income sectors that are most exposed to an economic downturn. We’ve highlighted that markets continue to price in a Goldilocks scenario, with spreads narrowing despite ongoing deterioration in the labor market. Spreads…
According to BCA Research’s Global Asset Allocation service, the economy has been in the “Overheating” phase of the cycle for a while, with signs of slowing growth but also stubbornly high inflation. The most likely next phase is “Recession,” though the…
The ISM manufacturing PMI declined further in May, from 49.2 to 48.7, thus disappointing expectations of a slower pace of deterioration. Similar to dynamics observed with their Chinese counterparts (see Country Focus), both US manufacturing PMI measures…