Funding financial institution MPS Capital Companies has warned that the US economic system will likely be in recession on the flip of the yr. The agency’s strategist predicts that the Federal Reserve will elevate rates of interest by one other 25 foundation factors, warning that the central financial institution’s financial tightening “will drag down the economic system.”
The strategist’s predictions for recession and rising rates of interest
Luca Mannucci, head of market technique at MPS Capital Companies, has warned that the US will likely be dragged into recession by the top of the yr and that the US greenback will plunge as a lot as 5% towards different currencies within the second half of this yr, Bloomberg reported Thursday.
MPS Capital Companies is an Italian company and funding financial institution, a part of the banking group that features Banca Monte dei Paschi di Siena SpA. The strategist was quoted as saying:
We anticipate a recession within the US by the top of the yr… The tightening of financial coverage will drag down the economic system.
Mannucci predicts that the Federal Reserve will elevate rates of interest by one other 25 foundation factors, whereas the European Central Financial institution (ECB) is predicted to boost rates of interest by no less than two quarter factors.
He expects the US greenback to weaken by round 3% towards the euro within the coming months because of the Federal Reserve’s rate of interest hikes, the information company reported, noting that the Bloomberg Greenback Spot Index has already fallen 1.6% this yr, and the has fallen about 10% from September’s report excessive.
The MPS strategist additional warned that the failure of a number of regional US banks, together with the issues dealing with Credit score Suisse, might result in tighter credit score situations and harm the economic system.
Many individuals have predicted a recession within the US. The president of the Federal Reserve Financial institution of Minneapolis, Neel Kashkari, says the present banking disaster has pushed the US economic system nearer to a recession. Economist David Rosenberg has warned of a “crash touchdown” and an impending recession for the US economic system. Gold bug Peter Schiff warned that the US will face a monetary disaster and a “rather more extreme recession” than the Fed acknowledges. In the meantime, billionaire “bond king” Jeffrey Gundlach predicts “painful outcomes” within the subsequent recession.
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