RaboResearch - Economic Research

Economic Report

Recession and CLOs

While CLOs performed well during the last crisis, and there is less dependence on short-term wholesale funding, the rise of loans with reduced investor protection and illiquidity are risk factors that could turn a run-of-the-mill recession into something worse.

Economic Report

Recession United States on the radar

Our early warning system based on the yield curve continues to point at a recession in the United States in the second half of 2020. However, our ‘recession radar’ suggests that the US economy is not in recession yet and is not likely to be in the near term.

Economic Report

United States: Return of the US debt ceiling

After being suspended for about a year, the debt limit returned on March 2. However, the Treasury Department will take extraordinary measures that could delay a federal government default to September or October.

Economic Report

National emergency on the US-Mexico border

President Trump declared a national emergency on the US-Mexico border that will allow him to divert funds to build the wall. The Democrats are likely to challenge this decision, bringing the country closer to a constitutional crisis.

Special

The US recession of 2020

The recent flattening of US treasury yield curve has activated our early warning system. Our model now gives a 69% chance of a recession by May 2020 and is increasingly pointing at 2020 as the year of the next recession.

Economic Comment

The next US recession

The US yield curve is getting flatter, which means that long term rates are only slightly higher than short term rates. We expect the yield curve to invert in 2019, which means that long rates fall below short rates. This would signal a recession in 2020.

Special

De economische impact van handelsoorlogen (Dutch)

Hoewel de effecten van de opleving van protectionisme in de jaren ’30 moeilijk te scheiden zijn van de effecten van de recessie, laat die periode in de economische geschiedenis wel zien dat de gevolgen van een wereldwijde handelsoorlog vele malen groter kunnen zijn dan de beperkte effecten van de huidige schermutselingen.