Analysts suggest a US recession could be on the way this year
Trump’s move, which saw the US slap a “baseline” 10% tariff on all countries – and steeper levies on many key trading partners – sent markets into a steep decline and sparked a huge selloff on Wall Street, with the president’s intransigence at the weekend doing little to calm fears of a sharp and prolonged economic downturn.
Speaking with reporters on Sunday, Trump appeared in no mood to back down on what’s become a signature policy, stressing the need to “forget markets for a second” and dismissing the prospect of a climbdown on tariffs.
The 10-year US Treasury yield, which strongly influences mortgage rates, slipped below 4% last week as investors abandoned stocks and flooded into the bond market amid rising recession fears.
Goldman Sachs says the risks of a downturn are still rising. Last week, the investment banking giant said those odds had jumped to 40%, up from 21%, because of the new US trade policy – and it now sees a 45% chance of the US sliding into recession.
JPMorgan Chase, meanwhile, now believes the economy will see recession this year, and expects the Fed to cut rates at every announcement between June and January.