A top economist has bluntly stated that the current global market sell-off is the result of a "deadly convergence of negative news" and warned investors that a near-term recovery is unlikely.

As markets approach Friday, investor sentiment remains bleak. This week, markets across Europe, the U.S., and Asia have faced widespread headwinds, with the VIX volatility index surging in response.

Thierry Wizman of Macquarie Bank noted in a client report that the downturn isn’t driven by any single factor. Instead, it stems from a combination of "deadly coincidences"—more precisely, a series of developments investors had hoped to avoid.

First, there’s the U.S. benchmark interest rate. Throughout 2025, markets had priced in Fed rate cuts, with a December reduction nearly certain. However, recent hawkish signals from FOMC members—amid a lack of federal data during the government shutdown—have shifted expectations.

According to CME Group Inc’s FedWatch Tool, the probability of a December rate cut has dropped from 94% a month ago to just 47% at the time of writing, with markets now leaning toward unchanged rates. This could trigger ripple effects: consumers won’t get pre-holiday relief, businesses face higher borrowing costs, and tensions over Fed independence may resurface.

Wizman’s "negative news checklist" continues: "Second, mounting evidence suggests slowing growth in key economies—the UK, EU, and Japan." "Third, uncertainty ahead of major fiscal decisions (e.g., Japan, UK) and accompanying political turbulence (e.g., France, UK)."

UK growth worries are intensifying after Q3’s anemic expansion. Chancellor Reeves faces scrutiny over balancing rising deficits with business/consumer-friendly budgets. France grapples with deficit concerns, while Japan’s PM Sanae Takaichi confronts calls for stimulus after GDP contracted 1.8%.

Surprisingly, this uncertainty hasn’t boosted the dollar as expected. Wizman added, "The dollar has only marginally benefited from these trends. It only regained its 'safe haven' status in the past two days, even outperforming the weakening Swiss franc and yen."

More bad news may be coming. Wizman noted the Fed might need further shocks to turn dovish: "While these narratives hover outside the U.S., dollar weakness seems unlikely unless U.S. stocks plunge sharply, forcing a Fed pivot."

Upcoming data—especially tomorrow’s jobs report—could rattle markets further. RSM’s Joe Brusuelas predicts a 50K September jobs gain but warns high-wage sector weakness may lurk beneath the surface. Upward revisions to July/August data (potentially totaling 100K jobs) might ironically dampen December rate-cut hopes.

Risk Disclaimer: Markets involve risks. This article doesn’t constitute investment advice. Investors should assess suitability based on individual circumstances.