Financial markets on Thursday issued a stern warning to the errors of Wall Street’s daredevils. Equities are still plunging and the bearish sentiment is far from over as hawkish central bank stances shake markets on recession fears.
The S&P 500 index sank to its lowest level since December 2020, extending its decline to nearly 8% this month. The pound is hitting new lows and commodity prices are being weighed down by the strong dollar. US Treasury yields continued to rise, with the 10-year bond yield temporarily rising 21 basis points (bp, 1 bp = 0.01%) to 3.898%, the highest level since April 2010.
Models from Ned Davis Research (NDR) show that the odds of a global recession have risen to above 98% recently. A “deep” recession signal is lit. The model reached this level in 2020 and during a severe downturn in 2008-09, he said.
“Risks of a deep global recession show rising for some time in 2023, which poses further downside risks to global equities,” said Alejandra Grindal and others in the company in an analyzed report.
Financial policy makers in Europe and the United States have failed to bail out risky assets that continue to depreciate in the wake of a wave of rising global interest rates. Bad news is pouring in around the world, and selling pressure is building in the stock market, which has already suffered its worst performance since 2008.
“Unfortunately, the process has to play out that way because the Fed won’t stop and the markets need to price it,” said Stephanie Lang, Homlik Berg’s chief investment officer, in a phone interview. out “There’s still some downside because even if it’s not a recession right now, it’s likely to be soon.”
news-rsf-original-reference paywall">Original title:
news-rsf-original-reference paywall">Everything-Wall Street Sell-Off Deepens on Recession Odds 98% (Excerpt)