October Outlook
October 9, 2019  |  By Hank Cunningham

Recession forecasts are commonplace and are based on evidence of slowing growth generally and manufacturing specifically. Uncertainty regarding the trade outcome is also troublesome.

Central banks have responded with renewed monetary accommodation and that is being accompanied by fiscal stimulus in China, India and a few Euro countries.  All eyes are on Germany, long the bastion of balanced budgets. They are musing publicly about a 50 billion Euro stimulus package. Such a move, in concert with the other monetary and fiscal stimuli already announced should, with a lag, be sufficient to fend off a recession and could result in a pickup in growth, at the margin.

The Fed is poised to cut the Fed Funds Rate on October 30 and has announced an expansion to its balance sheet. It may cut rates a second time before year-end. One result of this will be a steeper yield curve as short-term yields fall, while long-term yields may actually rise.         

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