📝See Risks Of U.S. Recession Above 50%: Rabobank

The outperformance of the S&P 500 relative to other G10 stock markets in recent years reflected the widely held view that, for the most part, the US economy had the ability to be more productive and more buoyant than many of its peers. That has changed. It is currently Rabobank’s view that the risk of recession in the US this year is greater than 50% as the impact of tariffs raises prices for consumers and reduces their purchasing power. While it is unclear which tariffs will stick and how high these will eventually be, the resultant uncertainty is also likely to have a detrimental impact on growth through delayed investment and consumption decisions. Since Trump’s tariff announcement on April 2, money has moved out of risky assets and into cash. The USD has also been on the back foot. The currencies that have outperformed the most are the CHF and the JPY, both of which are well established safe havens. That said, the EUR has also been doing a very good impression of a safe haven currency this month. In our view this is linked to the sea-change in the outlook for the EUR which stems from the changes to Germany’s debt brake earlier in the year and also to the Eurozone’s current account position. - Rabobank