Asian markets were weaker on Friday as investors braced for a U.S. rate hike next week amid growing concerns of a global recession following warnings from the World Bank and the International Monetary Fund.
The global economic outlook remains downbeat and some countries are expected to slip into recession in 2023, but it is too early to say if there will be a widespread global recession, the IMF said on Thursday .The IMF in July revised down global growth to 3.2% in 2022 and 2.9% in 2023. It will release a new outlook next month.
In comparison, the World Bank said the world could be edging towards a global recession in 2023 as central banks across the world simultaneously hike interest rates to combat persistent inflation.The world's three largest economies - the United States, China, and the euro zone - have been slowing sharply, and even a "moderate hit to the global economy over the next year could tip it into recession,", it said.
Indermit Gill, the World Bank's chief economist, said on Thursday he was concerned about "generalized stagflation," a period of low growth and high inflation, in the global economy, noting the bank had pared back forecasts for a majority of countries.In Asian trade, the yield on benchmark 10-year Treasury notes stood at 3.4509% compared with its U.S. close of 3.459% on Thursday.
The two-year yield , which rises with traders' expectations of higher Fed fund rates, touched 3.871% compared with a U.S. close of 3.873%. Two-year Treasury yields hit a new 15-year high after mixed U.S retail sales and jobless claims data, which analysts said reinforced the case for aggressive Federal Reserve rate hikes."Equities and other risk-sensitive markets struggle as it becomes clear that US inflation pressures are well embedded and that risks to the fed funds rate lie to the upside," ANZ economists said on Friday.The euro was up 0.1% on the day at $1.0006, having lost 0.