JPMorgan Chase & Co.'s market-based recession indicators show significantly heightened recession probabilities. The model reveals a 79% chance of a recession based on the performance of the Russell 2000 index (small-cap stocks), which has been greatly impacted by the recent market downturn.
While various asset classes signal increased recession fears, credit markets show comparatively less concern, although still exhibiting a rise in recession probabilities from previous months.
JPMorgan Chase & Co. says recession fears in stocks acutely tied to America’s economy have spiked to nearly 80%, while credit investors remain sanguine even as funding stress threatens to build.
The small-cap focused Russell 2000, which has been battered in the recent selloff, is now pricing in a 79% chance of an economic downturn, according to JPMorgan’s dashboard of market-based recession indicators. Other asset classes are also sounding alarms: the S&P 500 is pricing in a 62% chance of an economic downturn, while base metals show a 68% chance and five-year Treasuries indicate a 54% chance. By contrast, recession odds in the investment-grade credit market are at just 25% — though that’s still up from zero in November.
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