September 28, 2022
United States:
JPMorgan Says Stocks in Free Fall Mean Recession Is a Lock
The US stock market is sending a crystal clear signal on its view of the economy — a recession is all but imminent.
That’s the verdict from a trading model created by JPMorgan Chase & Co. strategists. It’s now saying the S&P 500’s 6.5% rout since the Federal Reserve turned extremely hawkish last week implies a 92% probability of US recession, up from 51% in August. Other assets are also flashing a similar warning. Pricing of base metals now carries a recession probability of 96%, up from 84% in August.
Europe:
Lagarde Says ECB Will Lift Rates at Next ‘Several’ Meetings
European Central Bank President Christine Lagarde said borrowing costs will be raised at the next “several meetings” to ensure inflation expectations remain anchored and price gains return to the target.
Addressing an event Wednesday in Frankfurt, Lagarde said bringing inflation back to the 2% medium-term goal is the ECB’s main mission — despite increasing concerns about recessions in Germany and the 19-nation euro zone.
Asia:
Asian Central Banks Need Broader FX Defense as Reserves Slide
Declining foreign-exchange reserves mean Asian central banks will probably start looking for alternative ways to support their currencies, according to Nomura Holdings Inc.
Some of the potential methods they may choose include mandating exporters to sell foreign-currency proceeds, placing restrictions on trade accounts, and introducing measures to boost capital inflows, Nomura analysts including Sonal Varma in Singapore and Ting Lu in Hong Kong wrote in a research note.
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