Bond market investors have priced in rate cuts by year end and have sent other signals they’re bracing for recession. Stocks, meanwhile, seem to reflect a different outlook, rallying into first-quarter earnings season, with the S&P 500 SPX hovering near the top end of its 2023 range after hitting a two-month high last week.Bond market investors have priced in rate cuts by year end and have sent other signals they’re bracing for recession.
Calvasina said clients are asking whether it’s possible for the stock market to bottom out before a recession hits, while noting RBC’s contention that the S&P 500 had priced in a recession when it hit its October low, marking a roughly 25% fall from its Jan. 3 record close. After all, fears that aggressive tightening by the Federal Reserve would drive the U.S. economy into a recession were a clear driver for that move lower, she wrote.
The recession was brief, running from February to October, as pivot from a wartime to a peacetime economy saw government spending suddenly dry up. Unemployment remained low despite soldiers returning home to compete with civilians for jobs. The stock market, meanwhile, had seen volatile conditions before the recession hit, with the S&P 500 dropping 43% in the early years of the war, exceeding somewhat the typical recession drawdown, Calvasina noted.
Dangerous hopium title to publish… must be low of interaction 🤡