US entering a recession? Not yet – Nomura

By FXStreet Analysts at Nomura have a number of simple models, based on financial data, that point to a marked increase in the probability of a US recession in coming months.

Key Quotes:

“All the models still suggest that a recession within the next six months or a year is not the most likely scenario. However, further deterioration in financial conditions would raise the specter of a recession.

We would note that recent financial market volatility may not be accurately capturing the current condition of the US economy. It is a well-established fact that financial markets are more volatile than can be justified by economic fundamental.

In other words, variation in risk premia accounts for a large part of financial volatility. 2 In this context, the probabilities that come out of our financial models currently are likely upper-bound estimates.”
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Source:: FX Street