Macro Briefing: 29 September 2022

* More than 2.5 million Florida customers without power from Hurricane Ian
* Fed’s Bostic favors a fourth 75-basis-points rate hike in November
* Federal Reserve is exporting inflation to economies around the world
* Deficits are more threatening now that inflation has surged
* China’s new fiscal stimulus exceeds amount issued in 2020
* Eurozone economic sentiment continues its steep decline in September
* UK Prime Minister Liz Truss vows to press on with tax cuts despite blowback
* US pending home sales fell for a third straight month in August
* 3mo/10yr Treasury yield curve up for fourth day, rising to highest since July:

There’s a 99% chance of global recession, predicts Ned Davis Research, based on a probability model. “This indicates that the risk of a severe global recession is rising for some time in 2023,” analysts at the firm wrote on Friday. By contrast, “We do not have conclusive evidence that the US is currently in recession.”

Treasury market’s implied inflation forecast continues to indicate that inflation has peaked. Yield spread for nominal less inflation-indexes Treasuries is holding near lowest levels of the year to date.