Rising US recession risk

Harry Colvin

Longview Economics

Since the Fed tapered its QE program, the US economy and markets have come under pressure. Major equity indices have trended sideways; the yield curve has flattened; implied inflation has fallen to multi year lows and cyclically sensitive parts of the economy have deteriorated (e.g. manufacturing, trade & capex cycles). In recent weeks, hawkish language from Fed governors has rapidly brought forward the timing of rate hikes. The key question therefore is whether the Fed is beginning to overtighten? At its core, the US economy appears robust: The service sector is expanding; job creation is reasonable; wage growth is picking up and housing data is mostly improving. At the edges of the economy, though, there are signs of fraying: The corporate sector, which leads the economic cycle, has become increasingly overstretched. As such, it’s vulnerable to tighter monetary policy from the Fed (and/or a macro shock): Profit growth is poor; leverage is rising; and the ‘financing gap’ is back at recession warning levels. Read more: (VIEW LINK)

1 topic

Harry Colvin
Longview Economics

Harry Colvin specialises in global asset allocation, macro themes, and commodities. He has built and developed Longview's commodity research process, timing models, trade recommendations and research products.


No areas of expertise

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.


Sign In or Join Free to comment