Investors expect the economy to avoid recession

With itssp trajectories, headwinds and tailwinds, the language of central banking abounds with aviation metaphors. Little surprise, then, that the policymaker’s most heroic feat is named after Apollo 11’s success in the space race. For wonks, a “soft landing” occurs when heat is taken out of the economy without causing it to veer into recession. Yet the phrase’s illustrious origins hide an ignominious reality. The first time such a landing was predicted, in 1973, by George Shultz, America’s treasury secretary, things did not go to plan. A recession began almost immediately; inflation blazed for the rest of the decade. Prices finally cooled under Paul Volcker, a Federal Reserve chairman, but only after interest-rate rises tipped America into successive recessions and the worst joblessness since the second world war.Though Mr Shultz’s forecast was catastrophically wrong, it was not unusual. As Michael Kantrowitz of Piper Sandler, an investment firm, has pointed out, investors often think a soft landing lies ahead as a Fed tightening cycle comes to an end. That is exactly what is happening this time around. Since October, the &500 share-price index of large American firms has risen by 16%. An index of investment-grade corporate-bond prices compiled by Bloomberg, a data provider, has rallied by 9%. Worries about recession, overwhelming a few months ago, seem almost forgotten.