The prospect of a smooth transition, or “soft landing” for the U.S. economy seems increasingly unlikely, according to Torsten Sløk, Chief Economist at Apollo Global Management, with his words coming shortly after hotter-than-expected inflation data in the country poured cold water on hopes the Federal Reserve would cut interest rates in March.
During an interview, as Business Insider reported, Sløk shared a shift in his outlook, now believing there’s a greater than 50% chance the U.S. will face a “hard landing or no landing” at all, moving away from the previous scenario he believes in, of a gentle economic deceleration.
This change in perspective comes as new economic indicators emerge. Despite previously advocating for a soft landing, Sløk’s view has evolved with the latest economic data that indicates financial conditions have shown signs of easing, with a surge in high-yield and investment-grade bond issuance, a rejuvenation in the Initial Public Offering (IPO) market, and an uptick in mergers and acquisitions activity.
These factors have contributed to a stronger job market, highlighted by a robust January jobs report that added 353,000 jobs. Moreover, recent data on GDP growth and consumer spending have exceeded expectations, indicating a potentially reinvigorated economy.
However, Sløk cautioned against optimism due to the delayed impacts of the Federal Reserve’s interest rate hikes, which have started to cool consumer spending and corporate borrowing, significantly affecting areas like commercial real estate by making loans more expensive.
As reported, the cryptocurrency market saw its total capitalization drop by over $60 billion after the core consumer price index (CPI) in the U.S., which leaves out food and energy prices, rose 0.4% from December, exceeding forecasts and marking the highest increase in eight months, government data showed.
The data has further dampened expectations of an imminent interest rate cut by the Federal Reserve. Any resurgence in inflation could even spark discussions about resuming rate hikes as policymakers have emphasized the need for broader price stability before considering reductions.
Bitcoin’s price had recently surpassed $50,000 as the spot Bitcoin exchange-traded funds (ETFs) launched in the US last month keep on attracting inflows.
Data shows that these ETFs have, since launch, brought n roughly $3 billion in net flows, even with the Grayscale Bitcoin Trust, which recently converted into a spot ETF, seeing over $6 billion of outflows.
As reported, over the past week cryptocurrency investment products attracted $1.11 billion in inflows, with Bitcoin-focused products making up 98% of total inflows at over $1 billion. Products offering exposure to Ethereum ($ETH) and Cardano ($ADA) also stood out.
Featured image via Unsplash.
