Continuing the Climb
While there is ample reason for optimism in the months ahead, many risks to the outlook remain as we continue the climb past peak growth and peak policy accommodation.
Global Market Outlook
Respond To Market Shifts
Since we issued our last Global Market Outlook in December, vaccination rollouts and robust monetary and fiscal support have accelerated the pace of economic recovery. COVID-related challenges remain acute in many areas, but the situation is improving, even in hard-hit emerging markets. As the US economy surges, European growth is poised to accelerate; emerging markets will soon follow. It appears that US market leadership may soon give way to international markets
Special commentary on digitization efforts in Japan. A growing affordability problem in US housing. April retail sales fall in Canada. The BoE upgrades outlook but keeps a steady hand. Eurozone service activity accelerates. Japanese PMIs remain downbeat. Australia’s retail sales resilient despite Victoria lockdown.
The May CPI data exceeded expectations with headline and core CPI jumping 5.0% and 3.8%, respectively. Pricing power is a key differentiator today with consumers flush with cash willing to spend and firms choosing to pass on those costs to consumers. Eventually, the pass through of higher costs should slow. Yet the US Fed’s position that the current inflation spike is “transient” will not mean it is fleeting. On the policy front, the FOMC should officially begin taper discussions at its late-July meeting.
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