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Predicting recession probabilities in most markets declined

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do economists predict a recession

Predicting recession probabilities have fallen sharply from the highs of 2022, the JPMorgan Chase & Co (NYSE:JPM) model shows.

In seven of the nine asset classes tracked by the model, from European stocks to investment-grade bonds, current quotes suggest recession chances are below 50%. The value of the S&P 500 suggests traders see a 73 percent chance of an economic downturn in the U.S., up from 98 percent last October, Bloomberg wrote, citing data from the bank.

Do economists predict a recession?

“Most asset classes are showing a gradual reduction in recession risks Thanks to the opening of the Chinese economy, the collapse in gas prices in Europe, and a more pronounced than expected slowdown in U.S. inflation,” said JPMorgan strategist Nikolaos Panikirtzoglu. — The market now sees a much lower likelihood of a recession than in October.”

Meanwhile, his colleague Marko Kolanovic warned that investors may be underestimating the potential pressure that a slowdown in U.S. economic growth could put on stocks in the coming months. At the same time, factors such as a decline in industrial production and retail sales, as well as a rally in the bond market and the Federal Reserve’s promise to keep rates high will play into the bulls’ hands.

Economists, on the contrary, have become more pessimistic-their consensus forecast calls for a 65% chance of a recession versus a 50% chance in October, Bloomberg notes.

Negative signals are also observed in the bond market — the yield on three-month US government bonds exceeds the yield on 10-year securities, indicating that investors are waiting for a slowdown in economic growth in the coming months.

On the other hand, many market participants are hopeful that the world’s central banks will be able to give the economy a soft landing — and it’s precisely because of such hopes that risky assets have rallied in recent weeks.

“I don’t want to say growth will be outstanding, I just think it won’t be a nightmare,” HSBC strategist Max Kettner told Bloomberg. — There are simply no catalysts to a decline and no unpleasant surprises, so the only way is up.”

Earlier we reported that the U.S. Treasury is going to use emergency measures because the national debt is getting closer to the ceiling.

Economy

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

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Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo

MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.

The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.

Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.

“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.

Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.

“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.

The bank will next convene to set its benchmark rate on Feb. 16.

The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.

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Economy

China identifies second set of projects in $140 billion spending plan

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China identifies second set of projects in $140 billion spending plan
© Reuters. FILE PHOTO: Workers walk past an under-construction area with completed office towers in the background, in Shenzhen’s Qianhai new district, Guangdong province, China August 25, 2023. REUTERS/David Kirton/File Photo

SHANGHAI (Reuters) – China’s top planning body said on Saturday it had identified a second batch of public investment projects, including flood control and disaster relief programmes, under a bond issuance and investment plan announced in October to boost the economy.

With the latest tranche, China has now earmarked more than 800 billion yuan of its 1 trillion yuan ($140 billion) in additional government bond issuance in the fourth quarter, as it focuses on fiscal steps to shore up the flagging economy.

The National Development and Reform Commission (NDRC) said in a statement on Saturday it had identified 9,600 projects with planned investment of more than 560 billion yuan.

China’s economy, the world’s second largest, is struggling to regain its footing post-COVID-19 as policymakers grapple with tepid consumer demand, weak exports, falling foreign investment and a deepening real estate crisis.

The 1 trillion yuan in additional bond issuance will widen China’s 2023 budget deficit ratio to around 3.8 percent from 3 percent, the state-run Xinhua news agency has said.

“Construction of the projects will improve China’s flood control system, emergency response mechanism and disaster relief capabilities, and better protect people’s lives and property, so it is very significant,” the NDRC said.

The agency said it will coordinate with other government bodies to make sure that funds are allocated speedily for investment and that high standards of quality are maintained in project construction.

($1 = 7.1315 renminbi)

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Economy

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

letizo News

Published

on

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo

MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.

The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.

Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.

“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.

Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.

“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.

The bank will next convene to set its benchmark rate on Feb. 16.

The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.

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