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The flattening (and partially inverted) US yield curve is signaling rising recession fears. There are signs that a rapid hiking cycle could narrow the window for a “soft landing” as a slowing economy amid elevated energy prices makes a recession increasingly probable.
Financial tightening in advanced economies and slowing trade growth have created less favorable conditions for emerging market sovereigns, which have been amplified by the effects of the war in Ukraine on commodity prices.
Is the market underestimating the risk of a surprise outcome in the French elections? Unlike 2017 the delicate phase for investors lies between the first and second round. A significant repricing of the political risk premium could occur in case we see (i) a massive shift in second-round voting intentions against incumbent Emmanuel Macron and/or (ii) a risk of massive abstention.