Vanguard: There is a high probability of the US economy entering a recession.

Tighter lending conditions after recent bank failures will push the U.S. economy into a moderate recession in the second half of this year, fueling a gradual increase in long-term bonds in anticipation of lower interest rates, according to Vanguard.

“We believe that it has driven the economy into a recession.”

“We think the tightening of credit standards is pushing the economy into recession in the second half of this year,” said Roger Hallam, head of global interest rates at Vanguard, the world’s second-largest asset manager.

Noting that he expects interest rate volatility to remain high in the short term, Hallam said, “There is a lot of policy uncertainty right now.”

Hallam also said that to compensate for losses in risk assets such as stocks in a possible recession, the level of the US 10-year Treasury paper yield is a “reasonably good opportunity” for investors to start extending their portfolios.

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