Macro trends have been stable this year in terms of rising growth expectations, declining political uncertainty and EM outperforming developed markets (DM). More recently, inflation expectations and the so-called “Trump trades” have consistently deflated. Will it last?
Charts that Matter
Inflation expectations have declined in recent months despite upward revisions to growth forecasts for major economies
Weakness in oil prices is a headwind for inflation as sharp declines in oil prices have historically coincided with decelerating core inflation
Many of the moves that followed the US election have reversed on reduced expectations for policy changes by the Trump administration
With global growth in the midst of a synchronized upswing, we expect a gradual increase in inflation, tighter monetary policy and less focus on political risks. As the global expansion widens out we prefer equity over credit, and credit over rates. From a regional perspective, we prefer EM relative to DM.
Download the Full Publication