In our latest Monthly Macro Outlook video, Luke Bartholomew, Senior Economist, talks about the Middle East, bond yields, the likelihood of recession and interest rates.

Key points:

  • Any escalation in the Middle East could push oil prices higher, drag on global growth and resist central bank attempts to control inflation.
  • Rising global bond yields aren’t just a reaction to central banks’ ‘higher for longer’ message on interest rates, but also to changes in structural factors which underpin bond markets.
  • Interest rates will stay at current levels until mid-2024 before starting to fall again
  • US economy to grow until at least mid-2024. This increases the likelihood of a ‘soft landing’, but a mild recession is more probable.
  • Eurozone is close to, or already in, recession; interest rates there will decline next year.
  • China’s economy faces considerable headwinds, but it should beat its 2023 target, while fears of long-term stagnation are overdone.