Growth Is Good, But Not Inflation

With today’s raft of service PMIs, there are more signs of stabilisation in the global growth cycle (both China and European indices bounced). There remain lingering concerns around the manufacturing cycle, especially in Europe, but the larger issue could be falling inflation. Indeed, US inflation expectations (as priced by rates markets) plunged towards the end of last year, and while they have bounced since, they have yet to recover to the levels seen before the plunge. More recently, Euro-area inflation expectations have fallen sharply...

With today’s raft of service PMIs, there are more signs of stabilisation in the global growth cycle (both China and European indices bounced). There remain lingering concerns around the manufacturing cycle, especially in Europe, but the larger issue could be falling inflation. Indeed, US inflation expectations (as priced by rates markets) plunged towards the end of last year, and while they have bounced since, they have yet to recover to the levels seen before the plunge. More recently, Euro-area inflation expectations have fallen sharply...

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