Global growth has been losing momentum and is expected to continue slowing toward or below trend. Risks remain of a Russian gas cutoff, which would have significant negative implications for global growth. Without this threat, consumer strength and solid corporate fundamentals would help put a floor on growth this year. However, recession concerns have been building due to tighter financial conditions, elevated food and energy prices and ongoing supply issues.
Turning to the US, we believe the recent payroll report should lock in the Federal Reserve for another 75-basis-point hike in September, and we foresee the federal funds rate ending 2022 at around 4.0%. Strong jobs data suggests a longer runway before downturn, but this could also keep the Fed in tightening mode.
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