Reserve Bank of Australia chief Philip Lowe’s expectation of further interest-rate rises ahead has prompted economists and money markets to narrow the odds of a recession in the $1.5 trillion economy. 

There is now a better than one-in-three chance of a slump over the next 12 months, a Bloomberg survey showed, up from one-in-four late last year when Lowe signaled a rate pause was in the offing. In the US, by contrast, recession probability has begun to come down.

The turnaround follows a jump in inflation that unnerved the RBA, prompting a hawkish pivot and for traders to price in four more hikes. That’s one more rate increase than is currently expected for the Federal Reserve.

(BBG-Continue Reading) 

Fear is creeping back into the stock market. To protect against a potential downturn, traders are scooping up hedges at the fastest clip since the onset of the Covid-19 pandemic. 

More call options betting that the Cboe Volatility Index, or VIX, will rise have changed hands on an average day in February than at any time since March 2020, Cboe data shows.

After lying relatively dormant for months, the VIX, also known as Wall Street’s fear gauge, rose above 23 last week, its highest level since the first few trading days of the year. Readings below 20 typically signify complacency, while those above 30 signal investors are scurrying for protection. 

(WSJ-Continue Reading)