Current View 11/21/2022

Today’s data showing a continued rising trend in jobless claims, an ongoing slump in consumer confidence and expectations, and a further slide in the purchasing manager indices across both the manufacturing and service sectors of the economy increases our conviction that the economy is moving toward a recession next year following the surge in inflation and interest rates this year.  The yield curve is deeply inverted, which has accurately foreshadowed past recessions.  Longer term Treasury yield have stabilized in recent weeks as inflation data moderated and economic growth indicators have disappointed.  Equity markets have jumped on reduced inflation fears, but that relief will likely prove to be temporary as recessionary conditions are likely to weaken earning expectations for the coming year