Research Team at Nomura, Suggests that the financial conditions have deteriorated further, while economic data, with the exception of industrial activity data, have been more resilient and appear to have held up better than what is being implied by financial markets. Key Quotes “We believe a full assessment of the likelihood of a recession has to take a variety of information into account. To a significant degree, the financial markets are telling a different story about the current economic conditions than are the economic data. But financial markets are usually more volatile than can be justified by economic fundamentals. For example, the variation in risk premia accounts for a large part of financial volatility. That said, although, the incoming economic data have been resilient, the correct approach to thinking about the likelihood of a recession probably lies somewhere between the estimates provided by the economic data and those from financial markets. The significant sell-off in financial markets since January does raise the risk of a recession markedly. However, if financial market conditions stabilize and economic data on the consumer and housing sectors remain on the current trajectory, we do not believe that a recession is the most likely outcome.” For more information, read our latest forex news.