Bank of America Corp. Chief Executive Officer Brian Moynihan said this week’s bond-market turmoil has been driven by issues outside the U.S., and that recession risks are low in the country as consumer spending remains strong.
“We have nothing to fear about a recession right now except for the fear of recession,” Moynihan said in a Bloomberg Television interview.
Bond markets have been signaling rising recession risks, with a closely watched portion of the Treasury yield curve inverting this week for the first time since 2007. Questions about the state of the economy and trade tensions have put pressure on bank stocks this month, with the KBW Bank Index falling 12% since the end of July through Thursday.
Yields on U.S. Treasuries have been dropping, with the benchmark 10-year Treasury falling below 1.5% on Thursday for the first time since August 2016.
Moynihan attributed the issues to slowing economic growth in Europe and China and businesses having to rework their supply chains to deal with the threat of increased tariffs.
“If you look around the world, there hasn’t been a lot of great news lately,” he said.
Bank of America’s customers spent $1.9 trillion this year through Aug. 12, an increase of 5.9% from the same period in 2018 — a sign that the economy, driven by the consumer, remains strong, Moynihan said. Delinquencies remain tempered amid low unemployment and rising wages, he said.
“The average worker is working, getting paid more” and that “translates into good credit performance on the consumer side,” Moynihan said. “The real risk for the U.S. economy is if the consumer slows down.”