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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
MARKET INSIGHT
- Following our note showing significant conditional probabilities of other economies being in recession either concurrently or within one year of the US experiencing a recessionary quarter (link), we take a look at an alternative US recession indicator.
- Traditional yield curve-reliant models have seen varied estimates (Bbg had 52% likelihood within 12 months from 2s10s or 22% from 3M18M fwd as of Jul 31) and NY Fed analysis from Aug 18 showed equity markets price in only moderate downward revisions to expected dividend and GDP growth (link), but here we look at historical sectoral net lending balances.
- Barring what was clearly an unprecedented transfer from the public to household sectors in response to Covid lockdowns, what stands out is that, when comparing with pre-pandemic levels, periods of fiscal tightening (orange line higher) plus a build-up of business net borrowing (blue line lower) has rarely not been followed by a period of recession.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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