For the longest time, anyone looking at capital markets for an indication of a looming recession could only find... crickets.
As the following chart from SocGen as of Thursday shows, financial assets were pricing in very little risk recession risk, despite various confused (or propaganda) outlets seeking to spook the Trump admin into panicking and believing that a recession is imminent, thus ending the trade war. To wit, while the NY Fed/St. Louis Fed GDP now estimates suggest a recession probability of <10%, Atlanta Fed's Gold-adjusted GDP now at -1.4% points to a recession probability of ... 73%!
And yet, SocGen's Jitesh Kumar writes that high yields spreads remain below 4%, and "we have never been in recession with high yield spreads below 4.5% (data going back to 1987)." In other words, US HY credit spreads are pricing in 0% recession probability.
