For about 2 years, we have expressed a view that US recession risks were low until late 2024 or early 2025. We are now amidst this period where interest rates remain restrictive whilst economic insulation has largely been exhausted.
The irony of market optimism over the last quarter is the rapid tightening of financial conditions it has produced. Financial conditions are around the tightest they have been since the eve of the GFC. We explore what this might mean for 2025 in our quarterly. We aren't trying to make a forecast, but we are trying to characterise risk.
For 2025, the best offense might just be a good defense.
