BlackRock analysts are once again sounding the recession alarm, with the central banks of the Fed, the ECB and the Bank of England preparing to further raise rates in the United States, the euro area and the United Kingdom respectively in the coming hours. their fight against inflation.
“Bringing inflation down means that (central banks) will have to scuttle demand, causing the already anticipated recession”, reads the note from BlackRock, which adds that it therefore believes that “central banks will continue to keep rates high until until the recession hits.”
At the same time, the world‘s number one American asset management giant points out that US Treasury rates have dropped.
The reason, according to analysts, is the fact that “the markets expect rate cuts by the Federal Reserve, (starting from 2023), a factor that has made the yield curve (of Treasuries) even more inverted”.
But BlackRock warns that the markets’ bets “misreflect the old hope” of Fed rate cuts and, as a result, remain “underweight advanced economy stocks and long-term bonds.”