An almost eerie period of low financial market volatility appears to be ending
as the exceptional U.S. economic expansion re-ignites the dollar and bond yields worldwide just as geopolitics worsen, emerging markets struggle and stocks wobble.
While the International Monetary Fund has over the past six months nudged up its 2024 world growth forecast by 0.3 percentage point to 3.2%, it’s dramatically raised its U.S. growth call by 1.2 points to 2.7% over the same period. The outlooks for all the rest of the G7 have been downgraded in that time and even projected growth in emerging markets at large was only lifted by 0.2 point.
Pressure on China to lean on exports again as its domestic demand recovery continues to be dogged by an ongoing property bust has opened up cracks in the yuan too. Long-term market inflation expectations, captured by the 5-year, 5-year forward inflation-linked swap, have jumped a quarter of a percentage point to almost six-month highs of 2.75% - far above the Fed’s 2% target.
Growth United States Dollar Level Volatility Point Inflation Treasuries Bank Of America IMF
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