Since the Fed raised interest rates, the hottest topic has been the "US recession".

According to the analysis of Deutsche Bank, according to Alphabet Inc-CL C's keyword search indicators, the number of Alphabet Inc-CL C searches for the keyword "recession" by Americans has soared recently.

In addition, the super-rich Musk also tweeted on the topic, saying that the US economy is "probably" in recession and reminding companies to pay attention to costs and cash flow.

Musk also said, "when the recession is over, the boom will happen again." This can be a difficult time, and I don't know how long the recession will last, maybe a year, maybe 12 to 18 months. "

Judging from the "avant-garde indicators" for observing the recession, the current result of US bond interest rates is actually much wider than the panic of March and April.

At that time, the two-year Treasury yield > the five-year Treasury yield > the 10-year Treasury yield really staged a great panic of the Great Recession.

Andrzej Skiba, head of US fixed income at RBC Global Asset Management, said: "the market reflects the increased risk of recession, as can be seen from the 2-10 and 5-10-year Treasury yields upside down. The Fed is sending a strong signal to fight inflation. "

The market demands higher risk return compensation for short-term bond yields, which also makes the market inclined to sell assets and redeem cash assets.

Back now, the yield on five-year Treasuries is still higher than that on 10-year Treasuries, and the good news is that two-year Treasuries have fallen a lot, which has also brought down market panic.

However, it is also because of this that there is a huge divergence of views on the market's judgment of the recession.

Recession expectations: pressure to raise interest rates drags down the economy

First, the initial recession expectations came from a sharp rise in commodities and crude oil.

Goldman Sachs Group analyst, led by Jan Hatzius, said in a report:

Oil and commodity prices have risen sharply since the conflict between Russia and Ukraine, and our commodity strategists' recent forecasts for crude oil and agricultural products suggest that real disposable income will be dragged down by 0.7 per cent, which will be a drag on consumer spending in 2022. "

They predicted that "further tightening of the financial environment, declining consumer confidence and slowing economic growth in Europe will be a drag on US economic growth".

Robert Schein, chief investment officer of Blanke Schein, also said: "even if the oil price stays above $100 a barrel for a few months, consumers and the economy can afford it, but if the oil price exceeds $100 for more than six months, we will see a surge in recession risk. "

Aneta Markowska, chief financial economist at Jeffery, also believes that the Fed's current cycle of raising interest rates faces double risks: "downward pressure on economic growth and upward pressure on inflation. Powell has chosen to incarnate as an anti-inflation fighter, and interest rates may rise enough to plunge the economy into recession. "

Historically, once the Fed starts to raise interest rates, recession has become an inevitable concern for the market.

Optimistic expectation: strong employment to save the market

On the other hand, Michael Wilson, chief U.S. equity strategist at Morgan Stanley, said that the reversal of the curve does not guarantee a recession, and Morgan Stanley economists do not expect a recession, suggesting that this is another evidence of the late cycle.

"We don't think there will be a recession in the short term, which is more human. Gargi Chaudhuri, director of iShares Investment Strategy America for Blackrock, said.

"while we cannot say with certainty that this is different, we note that there are many factors that are different from those when the yield curve was inverted," she wrote. "

She said longer-term bond yields were artificially low by investors such as improved pension funds, causing the curve to be reversed.

Recently, US Treasury Secretary Yellen also said that she did not expect a recession in the United States.Yellen points out that a strong job market is a better indicator of the health of the economy.

Yellen saidThe IMF expects the u.s. economy to grow by 3.7% this year, which is very reliable."We have a very strong labour market, household balance sheets are in good shape and financial institutions are strong," she said. "

Despite the risks in the outlook, Ms Yellen expects a "sound year" for the economy.

Asked about US stocks, Ms Yellen said the stock market was not "a reflection of the underlying strength of the economy". She believes that the US economy has become significantly resilient and that the labor market is performing very well, which is the strongest sign of the state of the economy.

End

In the end, Yellen clearly made the most appropriate speech in her position.

Nobel laureate Robert Shiller also said that "self-fulfillment of prophecy" could lead to a recession as investors, businesses and consumers become more worried about the US economy.

As investors, we have experienced the spread of the prediction of "here comes the wolf" since March, and we still can't let our guard down as to whether the real wolf will come, just like that fable.

Niu friends.

Do you think you should believe Yellen?

What measures will be taken when a recession occurs?

Where will it end this time?

You are welcome to leave your message in the comments section.