The United States of America will slide into a recession in Q4,2023. HSBC Asset Management disclosed this today in its latest analysis. It warned that with stock markets “out of sync”, Western economies and investors should brace up for a turbulent period.
It also stated that Europe will also join the recession band in 2024. According to Joseph Little, the Chief Strategist of HSBC Asset Management, “Our central scenario is for a recession in Western economies and a difficult, choppy outlook for markets.”
The HSBC analysts stated, “This is happening for two reasons. First, we have the rapid tightening of financial conditions that’s caused a downturn in the credit cycle. Second, markets do not appear to be pricing a particularly pessimistic view of the world.”
He said, “The recession is not going to be big enough to purge all inflation pressures out of the system. As a result, this points to a regime of somewhat higher inflation and interest rates over time.”
“The silver lining is that we expect high inflation to moderate relatively quickly. That will create an opportunity for policymakers to cut rates.”
According to CNBC, Big investors have begun to snap up bonds in the past few weeks, which slump in value in a high-rate environment. Investors see value ahead of predicted rate cuts next year.
In its midyear outlook, the British banking giant’s asset manager said recession warnings are “flashing red” for many economies.
Along with China, HSBC believes India is the “main macro growth story in 2023” as the economy has recovered strongly from the Covid pandemic on the back of resurgent consumer spending and services.
The United States Federal Reserve paused its monetary tightening cycle at its June meeting, leaving its Fed funds rate target range at between 5% and 5.25%, but signalled that two further hikes could be expected this year.
