By Dhara Ranasinghe and Stefano Rebaudo
London (Reuters) – Global risks of recession have reduced the list of market concerns, but reading economic data and key financial indicators is not as clear as it addresses it.
A 90 -day break on most of the reciprocal rates unveiled by US President Donald Trump in April attenuated investor fears, but business damage and consumer confidence should harm.
“The risks of recession have increased significantly even if there are agreements concluded on the prices,” said Guy Miller, chief market strategist at Zurich Insurance Group. “The risk of an American recession is 50 to 50, it’s so close.”
Here is an overview of what some closely watched indicators say about the global risk of recession.
1 / Hard vs sweet
A disconnection between so-called sweet economic numbers such as feeling indicators and hard data, for example, job figures, it is difficult to decipher the risk of recession.
The latest figures for American jobs indicate resilient economy, while economic contraction in the first quarter in the United States and expansion in the euro zone were both explained by prepositioning by companies before reciprocal rates.
Confidence indicators of companies and consumers have deteriorated, a sign for some this lower growth will soon be materialized.
Consumer confidence in the United States has dropped to a hollow of almost five years in April. Consumer spending is essential because they represent more than two -thirds of American economic activity. A morale index of investors in euros rebounded after diving nose in April but remains in negative territory.
“We assume that any contraction in the euro zone would be short -lived and relatively gentle,” said Henry Cook, MUFG’s main economist.
Miller de Zurich said he was looking at the weekly initial unemployment claims as the most opportune indicator of what’s going on in the American economy.
2 / Change your review
There is no distance from reduced growth forecasts.
Economists interviewed by Reuters indicate high risks of a recession this year, having planned strong growth only three months ago.
Barclays believes that the image is that of a significant global slowdown, combined with slight American recession and euros.
However, a recession is not an agreement concluded, say economists. If the United States can soon organize commercial transactions or carry out tax reductions, the risks would fall, while the economy of the euro zone will probably be buffered by lower rates and a budget revival.
“A resumption of consumption expenditure due to higher wages and a more dominant central bank than expected, at least in the euro zone, are the main factors that help avoid a profound recession,” said economist Bofa Ruben Segura-Cayuela.
3 / Where is the request? The signal of raw materials markets indicates a strong slowdown in growth.
Oil prices have dropped by around 16% so far this year for about $ 60 per barrel. If this is supported, 2025 would mark the worst year for crisps since the cocovid crisis of the 2020s.
Of course, they also reflect the expectations of OPEC’s offer, but the price is integrated into the wider image of lower demand while global growth slows down, according to analysts.
Copper, nicknamed “Dr Copper” for his history as an indicator of Boom-Bust, recovered from about a year in early April but remains below a peak of Mars.
Citi is down in the next three to six months while physical copper consumption and manufacturing activity slow down due to American rates, in particular 145% levy from manufactured China.
4 / Trust M. Bond?
The public bond markets reflect the concern about a slowdown induced by American prices, but no risk of increased recession, because the markets assume that central banks will respond quickly by rate reductions.
On Wednesday, China reduced rates to soften the blow of a trade war and traders increased bets to lower European central bank rates since March. They anticipate 60 basic points with an ease of softening of the ECB by December.
Merchants are waiting for around 80 points of base for the American federal reserve by December and 115 BPS by mid-2026, after having restored more aggressive expectations since the price break. The Fed left stable rates on Wednesday and said that the risks of higher inflation and unemployment had increased.
“In recent years, they (Fed Futures Futures) have constantly overestimated how the Fed would have endowed,” said Henry Allen, the macro-strarte of Deutsche Bank.
Also watch the yield curves, although their dependence as a recession indicator has been questioned recently.
The gap between the yields of the 10 -year and 2 -year treasure has been positive since last year. Although the reversal of the yield curve has historically been considered a recession predictor, the curve tends to return to normal as the recession is approaching.
“During recent cycles, the recession did not start when the curves were reversed, but when they are not reversed, as central banks have quickly reduced rates leading to short -term yields to the fall faster than those on a long time,” said Allen.
5 / Stocks, too optimistic
A rebound in the actions suggests that fears of recession has faded. German actions are at high records, New York and Tokyo jumped more than 15% of each of the bottom last month.
But pay attention to the benefits of the company.
Swedish Electrolux has reduced its perspectives while Volvo Cars, the manufacturer of computer gadgets Logitech and drink the Giant Diageo abandoned their targets due to uncertainty. General Motors pulled her forecasts for the year even though she reported solid results.
“The Q1 was perhaps the last of the not allocated benefits of profits, with prices a factor from T2,” said Miller de Zurich. “Given the uncertainty, I would have thought that the assessments should reflect at least part of this. So far, they do not do it.”
(Report by Dhara Ranasinghe in London and Stefano Rebaudo in Milan; edition by Yoruk Bahceli, Kirsten Donovan and Chizu Nomiyama)
