Hard Landing
The painful outcome when aggressive monetary tightening overcorrects and tips the economy into recession.
A hard landing occurs when a central bank's rate hikes are too aggressive or too prolonged, crushing demand sharply enough to cause a recession. Corporate earnings fall, unemployment rises substantially, and credit conditions tighten sharply.
Hard landing fears flip the narrative: "bad economic news becomes bad news" because the damage already outweighs any benefit from anticipated rate cuts. Defensive sectors, government bonds, and cash tend to outperform while cyclicals, high-yield credit, and commodities come under pressure.