Deutsche Forecasts US Recession

Deutsche put out a US recession call yesterday, looking for 2 consecutive quarters of contraction "during the fall-winter of 2023-24" (as well as Eurozone growth "modestly above zero that winter").

• That's based largely on tighter monetary policy, with the Fed funds peak rising above 3.5% next summer and QT adding the equivalent of 75bp of rate hikes (also ECB to raise rates 250bp between this Sept and Dec 2023).
• They also point to the inversion in the yield curve as a "relatively reliable leading indicator of recessions in the US".
• "We acknowledge that calling recessions is extremely difficult, especially so far in advance. This is generally not done until the downturn is all but upon us. But rarely have fundamentals based on historical experience and conventional recession indicators lined up so well to point toward this outcome."