Media reports say US markets are starting to worry that 2022 will bring more awful than expected.
Wall Street Journal reported that the first six months were filled with surprises. Like inflation, bond selloffs unprecedented in four decades, tech stock plunges never seen before, and crypto’s implosion.
A recession has been threatening investors’ heads for months. But it is still unclear whether or not the economy will slump. According to a survey, 90% of respondents believe it is likely. However, the New York Federal Reserve’s recession forecasting model predicts it with spurious precision of 4.11 percent.
Investors are primarily focused on the recession uncertainty, however, there are still risks abroad that could affect US investors.
A rise in bond yields may finally force Japan to relent, sucking back cash that has poured overseas by investors.
The Wall Street Journal reported that “the European Central Bank has promised a detailed plan for supporting Italy — but that pattern of too little, too late has established before. If it follows this pattern again, the markets could face a return of the eurozone debt crisis.”
The economy is likely to surprise us with almost any outcome. The recent recession panic should reverse if there is a soft landing.
According to the report, there could well be a big loss in the future if there is a recession since only the drop over the last few weeks appears to be related to it.