Until then, among the major banks on the planet, only Deutsche Bank saw, in its central scenario, the United States falling into recession. She is no longer the only one. Yesterday, Bank of America announced that it now anticipates a ” slight recession » from the second semester. “Economic momentum has slowed faster than expected”notes the chief economist of Bank of America Securities, the research division of the American bank.
the momentum was weighed down by “a certain number of forces” negative. “Perhaps the most worrying trend is that [du coup de frein qui concerne] expenditure on services »explains the economist of this commercial bank, one of the largest in the country, which has data from credit and debit cards.
Inflation, which has reached levels not seen for more than 40 years, acts as a “tax” on purchasing power. And this increase in consumer prices, almost double digits in the United States, forced the central bank to proceed with “mega” interest rate hikes. At the end of the month, the Fed should decide to raise the interest rate by 75 basis points, as in June, which was a first since 1994.
Bank of America Securities does not see “No respite from Fed rate hikes this year. » The financial institution, guarantor of price stability, has clearly expressed its desire to fulfill its mandate and “of its willingness to accept at least some pain in labor markets in this process. » The bank expects The Fed will raise the target range for the fed funds rate to 3.25-3.5% by the end of the year [contre 1,5-1,75% aujourd’hui], including another 75 basis point hike at the next monetary policy committee meeting in July. »
The S&P 500 expected at 3,600 points
This new scenario obviously has an impact on Bank of America Securities’ stock market expectations. Strategists say they expect the S&P 500 to fall to 3,600 points by the end of the year, implying that the broad index on which the largest American companies are listed will lose more than 3%, which has already fallen by 21% since the start of the year (including -2% today). No other major bank has been so pessimistic for the S&P 500, says Bank of America Securities, which until today was aiming for a target of 4,000.