Get ready for a long and messy August in the stock markets | Nils Pratley

Complacency from the US and Japan have fed the turmoil, but a gentle-ish landing is still on the cards

Choose the culprit behind the sudden sell-off in stock markets but a common theme in all top contenders is complacency.

In the first case, it is the US Federal Reserve that stands accused, in the eyes of the market, of being asleep to the risk of a recession in the US. Friday's weak jobs numbers intensified the worry that policymakers have waited too long to cut interest rates. Even if a US recession in the next year remains unlikely in the eyes of most economists (a 25% possibility says Goldman Sachs, upping its forecast from 15%), it's the difference from previous expectations that moves markets. At the start of 2024, virtually nobody was talking about a US recession; now it is a plausible outcome to be priced into models.