The near-term market outlook remains shaky, but there are some signs of stability. In essence, it’s clear that recession risk has been rising, while inflation risk has abated since the Fed’s 75 basis point hike in May.
Obviously, a recession is a negative for stocks as it guarantees a decline in earnings. But, it also means that Treasuries find a bid as investors flock to the safety of these instruments. In turn, this provides support to certain parts of the market that benefit from lower rates or whose earnings are less impacted by economic conditions.
