Analysis: Economic growth risks jolt inflation-obsessed markets

  • Inflation risks dominate, growth risks creep up
  • US yield curve heading back towards inversion
  • Growth risks a boon for battered bonds

LONDON, April 27 (Reuters) – After months focusing on central banks’ response to raging inflation, financial markets are being jolted into the realisation that a global economic downturn may now loom.

Sentiment dampeners include the Ukraine war, huge rises in energy and metals prices, aggressive central bank policy tightening led by the U.S. Federal Reserve, and China’s policy of locking down cities to ward off COVID.

The International Monetary Fund and World Bank fanned growth fears further last week when they cut 2022 global forecasts by nearly a full percentage point. read more

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Financial analysts too are increasingly pessimistic, with Deutsche Bank seeing an “outright” U.S. recession by end-2023.

Omens are flying in thick and fast.

They include warnings this week…

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