A US recession would see the world suffer. The US is the worlds biggest economy and financial marker driver. The US consumer is a very important engine of economic activity. Currently, the US is the only G-20 economy whose GDP level exceeds the pre-pandemic level. But problems may be ahead..
Less and less jobs are being created, unemployment is slowly but consistently rising, inflation remains sticky and economic growth looks to have stalled. The fix, to lower interest rates and the Fed have a huge buffer to play with until things get back on track.
On Monday, we saw a classic 'buy the rumor, sell the fact" play which caused a huge stock market reset. Calls for an emergency US interest rate cut were everywhere, but the Fed have yet to flinch, yet. A recession ahead in the US is at 25% probability and a 50bp rate cut is almost at a 100% for September.
Global stocks have recovered somewhat since the Asian session caused the crash on Monday, but GBP has yet to improve versus the USD & EUR. In fact, it has actually devalued some more against both currencies. With no economic data worth mentioning this week, it's unlikely we will see a Sterling recovery until next week at the very least..
| On this day - |
In 1428, the first organised witch trial begins in Switzerland In 1782, George Washington creates two honorary military badges to common soldiers, the first of its kind In 1955, Tokyo Telecommunications Engineering, the precursor to Sony, begins selling its first transistor radios in Japan In 1990, the US deploys troops to Saudi Arabia, beginning Operation Desert Shield |
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