Markets are pricing in a liftoff from near-zero policy rates as early as next year, even though the Fed through its new framework has committed to stay behind the curve on inflation. We caution against extrapolating too much from strong near-term activity data amid a powerful restart. We see a high bar for the Fed to change its policy stance and believe this may be underappreciated by markets.
A powerful economic restart is underway in the U.S. – with Europe and emerging markets (EMs) set to follow.
Elga lays out two main reasons to be optimistic on Europe – and European assets.
Elga explains why we see a growth pickup looming on the horizon. Hint: Watch the transmission of financial conditions.
Elga explains why we could see lower growth and higher inflation ahead in the U.S. Hint: trade tensions.