Is a US recession around the corner?

UBS
Door september 19, 2019 10:05

Is a US recession around the corner?

Recession worries intensified last week, with forecasters downgrading expectations for growth, earnings, and the outlook for US Treasury yields. We now expect US economic growth to slow to 1.3% next year, down from 2.3% this year, with the trade conflict with China weighing on confidence. But although growth will be sluggish, our base case is still that the US economy avoids recession. Support will come from the Federal Reserve, and we expect five quarter-point cuts by the end of next year. US data last week supported our view that while the manufacturing sector is contracting, with the ISM below 50 for the first time in three years, the services sector is holding up, along with job creation and consumer spending. Barring a further escalation in the trade conflict, we don’t see a further sharp move lower in 10-year US Treasuries, which we expect to end the year around 1.5%, versus 1.6% at present. In the medium term, if our base case is borne out, then we think the 10-year yield is likely to trade in a range around current levels. With risk-free yields so low, we favor income-generating opportunities.

UBS
Door september 19, 2019 10:05

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Asset Allocation Consensus September

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september 2019
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