Developed Countries
The force of the post-election momentum leads us to believe we could be stopped out of our defensive positioning before the week is out, but we still believe in our recession call. If we are eventually stopped out, we will seek a more opportune entry point to bet against risk assets once the election fever runs its course.
This Strategy Insight presents our view on today’s rate cut by the Bank of England as well as the budget announced by the UK government last week.
The prospect of a new trade war more than offsets the other pro-business parts of Trump’s agenda. With the labor market already weakening going into the election, we are raising our 12-month US recession probability from 65% to 75%.
Our thoughts on the bond market’s reaction to the election and this afternoon’s FOMC meeting.