Some eye-popping charts from Deutsche. Bonds worst in 250 years:
Stocks worst since Great Depression:
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And it will be deep because the Fed can’t turn early:
As Jim Reid himself says:
H2 is probably quite binary. If we don’t see a recession materialise over that period it might be tough for markets to continue to be as bearish as they have been, and a bounce back resembling history might be possible. However, it’s hard to see markets recovering if we see firm evidence of the recession. Regular readers will know we still favour 2023 as the starting point of the US recession (and bigger market falls) but the risk of an earlier move is clearly building with declining financial conditions, and consumer and business confidence plummeting.
I still think it is happening much earlier – like now!