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5/28/2019, 7:11 PM (Source: TeleTrader)
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Morgan Stanley warns recession risk 'higher than normal'

The risk of a recession in the economy of the United States is "higher than normal," Morgan Stanley analyst Michael Wilson said in a note to investors on Tuesday.

Wilson said: "Durable goods, capital spending and Markit PMIs were disappointing last week. All reflect April data, which means it weakened before the re-escalation of trade tensions. In addition, numerous leading companies may be starting to throw in the towel on the second half rebound." He commented that IHS Markit's manufacturing business activity index dropped to a near 10-year low in May and added: "Such a low reading on services and the composite measures have not been this low since the great recession."

The analyst also pointed out that the bond market has shown warning signs since November, especially in regard with the inversion of the three-month and 10-year yield curve. He added that the warning signs started earlier than investors initially thought as the curve adjusted for Federal Reserve asset purchases inverted in November and has been negative ever since.

Breaking the News / VP