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Jeff Mills: Global recession fears are overblown
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Loading...Global growth fears may soon loosen their hold on the U.S. stock market, says PNC’s Jeff Mills.
“I think, as we move into the second half of the year, this narrative of global growth potentially causing problems here in the U.S. is going to shift to a stabilization of global growth and then more of a focus on things like earnings,” Mills told.
Mills, who is co-chief investment strategist at PNC Financial Services Group, wasn’t as fazed by last week’s yield curve inversion as most of Wall Street was. Shorter-term Treasury yields crossing above their longer-term counterparts is widely seen as a sign of an oncoming recession.
Instead, he said investors should take the inversion with “a grain of salt,” saying it was more of a technically driven move than an outright signal of the U.S. economy hitting the brakes.
“There is a nuance going on in the fixed-income market right now,” Mills said. “It might be underappreciated.”
“Structurally, the yield curve is actually a bit flatter than it normally would be, so you could see more frequent inversions that don’t necessarily have to do with growth,” the strategist explained. “From a timing perspective, we all know that the variability between inversion and recession is pretty large, and you usually actually see positive S&P 500 returns between the initial date of inversion and the next recession. So it’s certainly not time to hit the panic button and sell right away. You have to acknowledge it, but I think we probably still have a little bit more time. ”
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