Will Recession Be Worse Than Previously Anticipated
Stephen Innes | Dec 08, 2022 12:58AM ET
US equities were little changed Wednesday, with S&P 500 down 0.3% heading into the close. But there was a more significant move in rates: with United States 10-Year yields down 12bps to 3.41%. Oil is down another 2.3%. From an investor's perspective, bonds and oil are where the recessionary wake-up calls are ringing.
Last week's firm Payrolls number plus this week's surprisingly robust ISM Services survey have raised doubts about the path forward for inflation, rates, and the Fed. And with a relative dearth of new macroeconomic information and sentiment still drenched in recession angst, investors continue orienting out of stocks and into bonds and gold as they contemplate the prospect of a still too-strong US economy and if a soft landing is anywhere near achievable.
And looking under the hood at critical market recession gauges, be it the yield curve inversion or closely watched. Oil benchmarks, investors are reactively more concerned about the potential of a more severe recession than previously anticipated. Oil bulls are feeling the discomfort of a macro-led environment where the prospects of a 2023 global recession are front and center. And as China heads for the zero-COVID off-ramp, darker days loom as COVID cases are bound to surge.
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