Should markets price in a US recession?
by AIB Treasury Economic Research Unit
- Given recent market gyrations, exacerbated by a weaker US payrolls number, it is worth asking whether the repricing of Fed futures markets for aggressive near-term rate cuts is warranted.
- As we discussed in last week’s publication, the US economy has been slowing of late following the rapid consumer-led boom in 2022-23.
- Digging into the payrolls data shows a general slowdown in private sector hiring, particularly in the retail sector, and potentially some weather-related effects.
- The labour market might now be feeling the effects of the pass through of the fiscal stimulus enacted by President Biden in 2021/22, alongside the lagged effects of monetary tightening by the Fed on private sector hiring and investment
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