With the first half of 2024 over, the financial world is turning its attention to the third quarter and market trends. Russell Investments argued that there is still no clear answer to the question of “Is the economy heading into the third quarter” of this year. No. Soft landing or hard landing?
“Our base case is that the U.S. economy will achieve a soft landing, but we see a 35% chance of a recession within the next 12 months,” Russell Investments said in a recent investor note.
Crash Landing
“The case for a hard landing rests on historical precedent,” the investment house said, noting that the Fed has embarked on its most aggressive monetary tightening since Chairman Paul Volcker. History shows that the U.S. economy has never avoided a recession after such a long period of tight monetary policy.
Soft Landing
“The possibility of a soft landing or a period of below-trend growth is supported by slowing future labor market indicators,” including slowing employment rates, slowing wage growth and signs of distress among lower-income consumers, who are seen as a risk of rising credit card debt and late auto loan payments.
No landing
“A no-landing seems the least likely outcome.” There is ample evidence the economy is slowing and inflationary pressures are easing, according to Russell Investments.
Investors looking to further track the economic outlook may want to analyze broader market averages and U.S. Treasury yields as indicators of sentiment. Below are some index-tracking ETFs and U.S. Treasury-focused ETFs that market participants can monitor.
Dow, S&P, Nasdaq ETFs: (NYSEARCA:DIA), (DDM), (UDOW), (DOG), (DXD), (SDOW), (NYSEARCA:Spy), (VOO), (IVV), (SSO), (UPRO), (SH), (SDS), (SPXU), (Nasdaq:QQQ), (QLD), (TQQQ), (QID), and (SQQQ).
Government Bond ETFs: (Nasdaq:TLT), (TLH), (IEF), (IEI), (SHY), (SGOV), (SCHO), and (BIL).
