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Investing.com -- Barclays said the U.S. economy has slowed to a pace that leaves it vulnerable to recession, with its updated “tipping points” model suggesting about a 50% chance of contraction within the next eight quarters.
Analyst described the current phase as a “stall” state, a period when growth decelerates enough to raise recession risks without confirming one is underway.
Barclays said this heightened susceptibility supports expectations that the Federal Reserve could start cutting rates in September.
On positioning, the bank said hedge funds and systematic investors increased equity buying in August as volatility fell, while long-only managers and commodity trading advisers favored bonds over stocks.
It cautioned that any weakness in labor data could accelerate this shift and weigh on equities, even as broader participation has supported the summer rally.
In China, Barclays said wafer fab equipment demand has held up better than expected, and now sees 2025 industry sales falling about 5% rather than more sharply.
It expects logic chips to account for about 70% of China’s market next year, before easing to 65% in 2026 as DRAM and NAND take a larger share.
The bank added that EU chipmaker ASML faces limited substitution risk, while U.S. peers Lam Research and KLA are more exposed to Chinese competition.