HSBC Asset Management has warned that the United States is likely to face economic challenges later this year, potentially leading to a global recession. The firm predicts a difficult 2024 for Europe as well, with economic contraction anticipated. HSBC’s mid-year economic outlook highlights the flashing warning signs for a recession in several economies and the potential trouble for investors and policymakers due to disconnect between fiscal and monetary policies and the equity and bond markets. HSBC’s Global Chief Strategist, Joseph Little, acknowledges that while certain segments of the economy remain stable, the overall balance of risks suggests a high risk of recession. Little also expects inflation to moderate, providing an opportunity for policymakers to cut interest rates. However, if a recession occurs prematurely, central banks may be unable to reduce rates due to soaring inflation. HSBC remains cautious in its portfolio approach, expressing interest in interest rate exposure and seeing value in European bonds. Despite the economic challenges, HSBC is optimistic about China’s recovery from the COVID-19 pandemic and expects India to be the main macro growth story in 2023. On a separate note, HSBC has rolled out its cryptocurrency services, allowing clients to trade Bitcoin and Ethereum ETFs.
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