JPMorgan (NYSE:JPM) strategists led by Nikolaos Panigirtzoglou said in a note on Thursday that the S&P 500 now implies an 85% probability of a recession.
The analysts said rate markets highlight increased concerns over the extent to which central banks can tighten without having to reverse course.
"Whether one looks at web searches or market pricing, there appears to be heightened concerns about the prospect of a US recession which could become self-fulfilling if they persist," wrote Panigirtzoglou. "Market concerns of a risk of policy error and subsequent reversal have increased."
Panigirtzoglou's report follows the S&P 500 falling into bear market territory, with inflation concerns and rate hikes worrying investors.
On Wednesday, US equities rallied despite the Fed raising rates by 75 basis points. However, that has been followed by a sharp turnaround Thursday, with the S&P 500 down.
On Thursday, the Bank of England raised rates by 25 basis points, while the Swiss National Bank raised rates for the first time since 2007.
According to JPMorgan's research, European equities imply an 80% chance of a recession.
By Sam Boughedda