Recession fear in US markets surges to 79%, says JPMorgan

JPMorgan Chase & Co. says recession fears in stocks acutely tied to America's economy have spiked to nearly 80 per cent, while credit investors remain sanguine even as funding stress threatens to build.

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The small cap-focused Russell 2000, which has been battered in the recent sell-off, is now pricing in a 79 per cent chance of an economic downturn, according to JPMorgan's dashboard of market-based recession indicators.

Other asset classes are also sounding alarms. The S&P 500 is pricing in a 62 per cent chance of an economic downturn, while base metals show a 68 per cent chance and five-year Treasuries indicate a 54 per cent chance.

By contrast, recession odds in the investment-grade credit market are at 25 per cent — though that is still up from zero in November.

"The Russell 2000, which as a more cyclical index should contain more information about the cyclical position of the US economy, prices in an average recession with high probability of almost 80 per cent," said JPMorgan strategist Nikolaos Panigirtzoglou.