Recession fears are stalking global markets, fanned by stubbornly high inflation and increasingly aggressive central-bank efforts to tame it. The resulting stampede from risky assets has been devastating for US stocks, which ranked among the worst-performing equity markets globally for the year so far. US small-caps and their growth-style offshoots have been hit especially hard.
As we highlight in our latest Russell US Spotlight report, markets are clearly sounding the recession alarms. Spreads between short and long-dated US yields resumed bear flattening, with the selloff in short-dated US Treasuries outpacing that of their long-dated equivalents. The latest downtick came in the wake of the Fed’s 75-basis-point rate hike in May and its subsequent hawkish rhetoric, which ratcheted up worries of a hard landing for the US economy.
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