Analysis of NDR Development Game Prediction Model... US Dow Jones Index Enters Bear Market
[Asia Economy Reporter Park Byung-hee, New York=Special Correspondent Jo Seul-gi] Global asset markets are in free fall as concerns over an economic recession rise due to the US's aggressive tightening. The US Dow Jones Industrial Average, centered on blue-chip stocks, has entered a bear market, while the S&P 500 index hit its lowest point of the year. There is also a warning that the probability of a global economic recession next year has reached 98%.
According to Bloomberg on the 26th (local time), the economic forecasting model developed by investment advisory firm Ned Davis Research (NDR) shows that the probability of a global recession has exceeded 98%. NDR explained that such a high recession probability has only been seen during the 2008-2009 global financial crisis and the 2020 COVID-19 pandemic, indicating a severe recession signal. NDR added, "A severe global recession will occur sometime next year," and "there is a risk of further declines in global stock markets."
On the same day, the New York Stock Exchange's Dow Jones index entered a bear market, defined as a drop of more than 20% from its previous peak. The S&P 500 index fell 1.0%, marking its lowest level of the year. While some see this as a buying opportunity, Lisa Shalett, a fund manager at Morgan Stanley Asset Management, compared optimists to "sleepwalkers standing on a cliff," warning of further declines in the New York stock market.
The sell-off in government bonds is also intensifying. The 10-year Treasury yield surpassed 3.9% intraday, the highest level in 12 years since 2010. The 2-year Treasury yield exceeded 4.3%, reaching a 15-year high. The UK's 10-year government bond yield surged to 4.25%.
The US Federal Reserve's aggressive tightening and the collapse of the British pound are fueling a super-strong dollar. The ICE Dollar Index reached 114.67, hitting a 20-year high. Concerns are spreading that the strong dollar will depress the value of currencies other than the dollar, worsen inflation, and push the global economy into recession. Bloomberg analyzed, "Wall Street is selling off all assets out of fear of a recession."
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