U.S. Economic Outlook. June 2019

Baseline growth forecast unchanged, but risks to downside growing. Model-based recession projections suggest probability around 60% over the next 24-months. Mixed signals from labor market indicators. Inflation outlook in question with core PCE persistently below target. Fed preparing markets for rate cuts in 3Q19.

Key points

• Key points:
• Yield curve dynamics mainly driven by flight to safety and dovish monetary policy expectations
• Weaker demand pressuring oil prices, but geopolitical risks remain

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