| The risk of a US recession. A mixed outlook for stocks. Emerging markets are primed to lure investors. Here's what you need to know today. More economists are coming around to the view that a US recession is possible by the end of next year. The downturn may well be modest, but it might also be long. Many observers expect any decline to be a lot less wrenching than the 2007-09 Great Financial Crisis and the back-to-back downturns seen in the 1980s, when inflation was last this high. But it could end up lasting longer than the abbreviated, eight-month contractions of 1990-91 and 2001. That's because elevated inflation may hold the Federal Reserve back from rushing to reverse the downturn. Much of the manufacturing sector across the world is already slowing: check out these charts explaining the global woes. Asian stocks may climb as trading begins Monday, providing some relief from the worries about slowing economic growth and sticky inflation that continue to cast a long shadow across markets. Futures pointed higher for bourses in Japan and Australia, while S&P 500 and Nasdaq 100 contracts fluctuated, after Wall Street ended in the green Friday. US stock and bond markets will be closed for the Independence Day holiday. In the US, this year is already one of the worst in terms of big daily declines, with the S&P 500 Index falling 2% or more on 14 occasions, putting 2022 in the top 10 list according to data compiled by Bloomberg going back two decades.  | Emerging markets may well be able to stare down a US recession and even lure investors. Beyond the short-term turbulence, money managers including JPMorgan Chase & Co. and Deutsche Bank AG say developing nations will be cushioned by cheap valuations, higher yields, faster growth and above all, a resurgent China. That sounds like a tall order given the current scale of losses in emerging markets. Stocks and bonds have been gripped by the sharpest slump since the 1990s, while currencies are suffering their worst losses on record, beating even the Covid rout of 2020. And Argentine assets are set for increased scrutiny following Saturday's sudden resignation of Economy Minister Martin Guzman. As President Xi Jinping traveled to Hong Kong to celebrate the 25th anniversary of the city's handover to China from the British, it was a time of reflection for those in Taiwan. A year before Britain handed Hong Kong to China, then-President Jiang Zemin hailed the "one country, two systems" plan for the city as a model for one day unifying with Taiwan. Taiwan would get "a high degree of autonomy" -- the same pledge China used for Hong Kong -- while keeping legislative and independent judicial power, and its own armed forces. For Taiwan though, the proposal has never been an option. The Chinese Communist Party's sweeping crackdown on dissent in Hong Kong makes any form of integration with China even more difficult. What's already bad for Chinese dollar bonds is getting worse. Another developer, Shimao Group Holdings Ltd., said it didn't pay a $1 billion dollar note that matured Sunday, adding to a record year of offshore-bond delinquencies in the sector. The luxury builder said in a Hong Kong exchange filing it also hasn't made principal payments involving some other offshore debts and has been in discussion with creditors while trying to reach "amicable resolutions." It's a worry for investors as Shimao is considered a bigger threat to the offshore credit market than the crisis at beleaguered property giant China Evergrande Group. Here's our explainer on the mess. This may not be the recession that Treasuries are looking for. US benchmark 10-year yields dropped last week by the most since the start of March 2020, as fears gripped markets that aggressive Federal Reserve interest-rate hikes will cause a severe US slowdown. Now, there are growing signs the US economy is losing momentum -- recent releases showed softer consumer sentiment and spending, and weaker business activity. The problem is that, for all the talk of inflation peaking, it has yet to do so -- and the Fed's impact may do little to immediately counter the supply shocks that are key drivers for cost pressures. Looking back to the late 1970s, an era often invoked recently, it's clear that yields back then didn't drop during the recessions that hit during that decade. In decades following, yields usually started declining before a GDP contraction and then continued to do so. The key difference between the two eras was inflation, which was much higher in the 1970s than for any time since. Until now, of course. Garfield Reynolds is Chief Rates Correspondent for Bloomberg News in Asia, based in Sydney. | 
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