Get set for a stonking global recession

According to Deutsche Bank, it is coming in a little over a year. My personal view is it will arrive sooner, beginning sometime later this year overseas and in 2023 in Australia. My own view is also that it will take fewer rate hikes. At this point, that’s not terribly important. The strong base case is that it is coming.

Today, DB’s Head of Research and Chief Economist David Folkerts-Landau has published an important piece alongside Peter Hooper and myself. Early last summer we launched our “What’s in the tails?” series to express views that were different to the House View. In our first paper, we argued that higher inflation was going to be the defining macro story of the decade. In this new paper, we discuss how Fed Funds and the ECB rate will likely have to go higher than the consensus believes and that, as a consequence, the upcoming recession will be more severe than even our outlier House view forecast.

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