8.9 C
New York
Friday, March 24, 2023

Vanguard investment chief sees near 50-50 chance of recession in 2020

Vanguard investment chief sees near 50-50 chance of recession in 2020© Reuters. FILE PHOTO: Principal and global head of Vanguard Fixed Income Group Greg Davis speaks at the Reuters Global Investment Summit in New York

By Trevor Hunnicutt

HOLLYWOOD, Florida (Reuters) – The U.S. Federal Reserve could hike interest rates once more by June despite a growing, near 50-50 chance of a 2020 recession, Vanguard Group Inc Chief Investment Officer Greg Davis said on Monday.

Davis sees steady inflation and an environment that can be supportive of corporate bonds and other relatively risky assets. Wage growth and other economic data could help the Fed raise rates once more before a “permanent” pause given heightened uncertainty on trade, geopolitics and other issues.

“You just know there’s risks, and with risk comes uncertainty, and with uncertainty businesses tend to be more cautious,” Davis told reporters at the Inside ETFs conference in Hollywood, Florida.

Growth in the United States will likely slow to 2 percent over the next year, with China’s rate at 6 percent and Europe’s at an anemic 1 percent, he said.

Risks of a U.S. recession are 30 percent to 35 percent for 2019, but rise to between 40 percent and 50 percent for the year after, according to Vanguard’s models, Davis said.

Late last month, the U.S. Federal Reserve said it would be “patient” before making any further moves on rates due to increased uncertainty around the economic outlook.

Davis said Vanguard’s active portfolio managers have been positioning for a wider gap between short- and long-term bond yields, adding that they have grown more defensive on corporate bonds and see cash as a place where investors can earn a reasonable rate of return with zero risk.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Source: Investing.com

Related Articles

Stay Connected

- Advertisement -

Latest Articles

Popular Articles