Tighter lending conditions after recent bank failures will likely drive the U.S. economy into a shallow recession in the second half of this year, bolstering the case for a gradual increase in exposure to long-term bonds in anticipation of a decline in interest rates, a Vanguard executive said on Monday.
"That backdrop of tightening lending standards is what we think drives the economy into recession in the second half of this year," said Roger Hallam, global head of rates at Vanguard, the world's second-biggest asset manager, speaking during an online event.
Traders in money markets on Monday were largely expecting the U.S. central bank to increase rates by an additional 25 basis points at its next rate-setting meeting in May.
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