Perhaps paradoxically, February’s market turmoil was a response to signs that the global economy is reducing slack.
US employment and wage indicators led investors to take a more “inflationist” view, with a rise in yields pre-empting future Fed tightening.
Price pressures in Europe also appear to be picking up, with PMIs pointing to stronger economic growth in Q1 2018.
The Chinese economy appears to be stuck in neutral, with mixed PMIs and inflation falling to 1.5% year-on-year.
The Australian economy continues to improve, but wages growth remains subdued and the RBA is unlikely to raise rates in the near term.
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