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Fears of an economic recession threaten markets

Posted on June 14, 2022 We open the week with the same tone as the previous one, with a session marked by massive sales that flee from risk and reflect a terrified market, given the monetary policy decisions of the FED and the BoE. Inflation continues unabated and the central banks are not letting up, and liquidity restrictions have intensified the sale of shares and bonds. Since last week, fear has returned to the markets, when the president of the ECB left the door open to more pronounced increases in interest rates, depending on the evolution of inflation. The US inflation published last Friday was the highest in the last 40 years, which has caused expectations to point to the FED raising interest rates by 50bps, both in tomorrow’s meeting and in the next one in July. This dynamic removes the possibility that the increases will decrease for September, it is even estimated that a rise of up to 75bps is now possible for said meeting. The increased probability that the Fed will tighten policy lowers the chance of a soft landing, so the chance of a recession continues to rise. Regarding the Eurozone, growth forecasts point to stagnation in the coming quarters, along with high inflation projections. High energy prices, supply chain problems and China blockades are the elements that are directly influencing and affecting the Euro economies right now. The labor market appears to be the only holdout at the moment, core inflation will remain elevated as wages catch up with price increases. INFORMATIONTitleThe fear of an economic recession threatens the marketsDescriptionWe open the week with the same tone as the previous one, with a session marked by massive sales that flee from risk and reflect a terrified market, given the monetary policy decisions of the FED and the BoE. Author GLOBALCAJA