As the first half of 2024 wraps up, the financial community now shifts its attention towards Q3 and where markets are potentially headed. Russell Investments argued that there is still no clear answer to this year’s question of ‘is the economy headed towards a no, soft or hard landing?’
“Our base case scenario is for the U.S. economy to achieve a soft landing, but we still see a 35% probability of a recession over the next 12 months,” Russell Investments said in a recent investor note.
Hard Landing
“The case for a hard landing (recession) relies on historical precedent.” The investment institution indicated that the Federal Reserve has embarked on one of its most aggressive tightening campaigns since Fed chairman Paul Volcker. History suggests that the U.S. economy has never previously avoided a recession after such a sustained period of restrictive monetary policy.
Soft Landing
“The potential for a soft landing or a period of below-trend growth is backed by the slowdown in forward-looking labor market indicators.” Some of these indicators include hiring rates, the cooling of wage growth, and signs of distress from lower income consumers, which is seen as risks on rising credit card debts and delayed auto payments.
No Landing
“No landing seems the least likely outcome.” According to Russell Investments, there is enough evidence that the economy is slowing and that inflation pressures are easing.
For investors looking to further track the outlook on the economy, they may want to analyze the broader market averages and U.S. Treasury yields as sentiment gauges. Listed below are a handful of index tracking and Treasury focused ETFs market participants can monitor.
Dow, S&P, and 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).
Treasury ETFs: (NASDAQ:TLT), (TLH), (IEF), (IEI), (SHY), (SGOV), (SCHO), and (BIL).
