Ruffer: Economy 'incapable' of enduring interest rates over 5%

US and UK recession on the horizon

The economy and financial ecosystem are “incapable" of enduring interest rates in excess of 5% after becoming “conditioned” to low interest rates, the managers of Ruffer Investment Company have warned.

In the trust's July fund report, managers Duncan MacInnes and Jasmine Yeo said that despite managing to avoid a recession so far, the US and UK will soon be entering one. The managers argued economic fundamentals have continued to weaken towards "recessionary territory", citing "visible cracks" in the labour market, manufacturing survey data and a reduced availability of credit. Despite this, they noted the Nasdaq had risen 27% year-to-date due to market optimism that the economy will avoid a recession. Lower than expected job creation in the US lifts hopes for 'soft landing' "T...