Andrew Bailey, a boss from the Bank of England delivered an apology after foreseeing the market. He said that the economy is apocalyptic. Monetary policy said that it encountered the biggest test in 25 years following the surge of inflation due to the war and Covid lockdowns. Jerome Powell, a chief of the Fed warned that stabilizing inflation would cause some pain.
Theoretically, recession could happen when economic contraction lasts in two financial quarters. It could happen on many scales globally, nationally, and regionally. Recession in other words could inflict economic disruption. Worse, it could last a few months. It could also attack many sectors such as GDP, real income, employment, industrial production and wholesale-retail sales. Recession typically happens due to the losing confidence in business and consumers.
Market becomes too volatile. The surge of inflation will surely cause aggressive rate hikes in major economies. The other risk would be the inevitable recession risk. The epitome is in Australia’s central bank. The rate hike in June signifies that it would escalate the Aussie dollar.
Based on the China data, the fear of growing recession risk is inevitable. U.S. 10-year Treasury yields plunged almost at 30 basis points from 3- half year high. It hit around a week ago. Currently, stock markets are still stable. However, the first quarter of eurozone GDP numbers, U.S. retail sales, and industrial production data pose a new test for a fragile market.
Reuters polled a forecast of retail sales raising around 0.9% versus a 0.5% gain a month. Britain’s unemployment rate crashed to its lowest since 1974 at 3.7%. It could bring some comfort for policymakers. When sentiment occurs, commodity prices spikes. Wheat and agricultural goods prices also shot up on Monday, adding the the apocalyptic economy.
