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The U.S. is now likely to pull off the perfect 'soft landing' as it the economy will likely avoid recession, according to deVere Group.
The independent financial advisor and asset manager says the sharp slowdown in U.S. inflation raises hopes that the Federal Reserve is going to be able to bring down inflation without steering the US economy into a recession.
"There had been legitimate concerns that with the aggressive monetary policy to cool red-hot inflation, the central bank might overtighten and push the world’s largest economy into a deep and/or protracted recession," says Nigel Green, CEO of deVere.
The BIS on Wednesday reported headline CPI inflation rose 3.0% year-on-year in June, undershooting analyst expectations for 3.1% and down on May's 4.0% figure.
"The battle on rising prices is being won, as the data suggests, meaning the pressure is off the Fed for future rate hikes," says Green.
Money market pricing shows investors nevertheless expect another 25 basis point hike in July, although expectations for a follow-up move in September have declined notably.
"Cooling inflation and a strong and resilient labour market suggest that no recession will come in 2023," says Green. "We believe the Fed has pulled off the perfect soft landing."
The Dollar fell sharply against all major peers and stock markets rose as the 'soft landing' scenario was increasingly embraced by investors.
"Tech, especially areas such as software development, cloud computing, artificial intelligence, cybersecurity, and e-commerce, should do well,” says Nigel Green. "Investments in pharmaceuticals, biotech, medical devices, and healthcare facilities will also be appealing."