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The U.S. economy slipping into recession

Экономика США скатывается в рецессию

On the U.S. economy continue to be quite weak macroeconomic data. On Tuesday, for example, those were the data on foreign trade deficit. What’s the big picture?

So, the US trade deficit was the highest for the last six months. Although statistics on business activity index in the services sector were to some extent positive, it should be understood that this is only a survey of the attitudes of the employees of this sphere, therefore, foreign trade in this case attracts more attention.

We have repeatedly appealed to the model of forecasting GDP growth rates created by the Federal reserve Bank of Atlanta, and she is well-known. Currently, this model shows a reduction in the forecast for GDP growth in the first quarter to 0.4%.

Especially noteworthy dynamics. Back in February, the model indicated the U.S. GDP growth of 2.5%, and then literally started the steep fall in expectations.

Thus, in the States, happy is drawn a grim picture, with the fed trying to raise rates, at least pretends that he still intends to do it.

For example, the head of the Chicago fed Charles Evans said that the markets are more pessimistic in their forecasts for a rate than the fed. According to Evans, this year it is advisable to spend two more increases in the key rate.

While market participants more soberly assess the situation. Judging by dynamics of futures market, investors expect only one more rate cut by the fed.

There are in the States and another problem, which has yet to come to the fore: “junk” bonds. To some extent, in this segment of the market has had time to inflate the bladder, and the negative effect it is only a matter of time.

According to experts of the rating Agency Standard & Poor’s, the number of defaults on high-yield bonds in the U.S. reached the highest values over the past 6 years.

S&P analysts note that in the last 12 months have defaulted on their debt obligations has announced the 3.8% of American companies with “speculative” credit rating. It is the highest rate since 2010

Wazza Diane (Diane Vazza), head of research at S&P bond market, in an interview with TV channel CNBC has declared that within 2016, the number of defaults on high-yield bonds (considered “junk” because of the degree of risk associated with investments in these assets), most likely, will grow. However, a significant proportion of companies experiencing problems servicing their debts, accounts for the primary sector.

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