Demand: Summer Strength Boosts Consumption Ahead of Risky Fall

Global demand is holding, temporarily boosted by summer travel, but recession has now crystalized as solid risk further down the line. Inflation is pervasive and will force central banks to lean harder against it. In the US and Europe, the Federal Reserve and the European Central Bank may have to shock the economy harder, that is, by hiking interest rates faster and higher than initially expected by the market. And given the fast pace of hikes and the unprecedented shrinkage of fiscal stimulus, except in China, there is less reason to believe that banks will manage to stave off inflation without a recession and achieve a soft landing.