Betting on a US Recession Despite the Fed’s View: Bond Traders Take Risks
Bond traders are betting big on a US recession, despite the Federal Reserve’s optimistic outlook for the economy. Bloomberg reports that investors have been piling into wagers that suggest a downturn is imminent. This divergence between markets and monetary policy has many concerned about what lies ahead.
The latest economic data paints an uncertain picture of the future, with job growth slowing and consumer spending remaining weak even as some sectors show signs of recovery. With interest rates already at historic lows, there appears to be little room for further stimulus from central banks if needed to stave off a recessionary period in 2021 or beyond.
Meanwhile, credit risk remains elevated across all asset classes due to ongoing uncertainty surrounding global trade tensions and geopolitical events, such as Brexit negotiations and rising tensions between China and Taiwan. As such, bond traders appear unwilling to take any chances when it comes to their investments in light of these risks – opting instead for safe-haven assets like US Treasury bonds while they wait out potential volatility ahead before making more aggressive bets on stocks or other securities again down the line should market conditions improve significantly over time.Read more at Yahoo Finance