Morgan Stanley: ‘Hard landing’ odds jump as investors worry about economic growth

The probability of a “hard landing” for the U.S. economy has jumped, with stock and bond investors worried about slowing economic growth, according to Morgan Stanley’s wealth-management division. 

“The stock- and bond-market downturn has advanced to behavior resembling a classic cyclical bear market rather than simply a correction,” said Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, in a note Monday.

“With Federal Reserve policy still poised to accelerate the pace of tightening, with balance-sheet reduction entering the mix and inflation proving somewhat stubborn,” she wrote, “investors are shifting their gaze toward potential for a growth scare if not an outright recession.”

Morgan Stanley sees a 27% chance of recession in the next 12 months, with the probability jumping from just 5% in March, according to the note. Shalett said the Institute for Supply Management’s manufacturing PMI index, a…

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