Barclays has seen an uptick in recession fears, as measured by the performance of various portfolio groups categorized by their traditional performance during different parts of the business cycle. The firm stated that its “early recession” portfolio basket has seen its largest increase in months.
“For the first time this year, there has been a substantial uptick in the performance of our recession business cycle baskets,” Barclays U.S. equity research team noted.
The investment institution indicated that its investment baskets include five stages of the business cycle, with three expansion stages and two recession stages represented.
“While our ‘Late Expansion’ basket has been the clear winner since the October 2023 lows (and the ‘Early Recession’ basket the biggest laggard), both of our recession baskets (early and late stage) have been closing the gap since the end of March, with ‘Early Recession’ making the most headway,” the firm stated.
The U.K.-headquartered bank also said that this suggests that recessionary fears are starting to creep back into the equity space as markets now have reset expectations about the Federal Reserve’s interest rate policy.
See the below chart that Barclays research team provided:
Here are some exchange-traded funds tied to the major equity averages:
(NYSEARCA:DIA), (NASDAQ:QQQ), (FXAIX), (VFIAX), (VFFSX), (NYSEARCA:SPY), (VOO), (IVV), (RSP), (SSO), (UPRO), (SH), (SDS) and (SPXU).
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