INSIGHTS

A slowdown in the US economy – predicted over and over due to the expectation that the longest post-war boom is drawing to a close – currently seems to be taking shape.

The US jobs market still shows vitality, while in Europe the deceleration seems for the most part to be behind us

As a result, the amount of available liquidity – whose contraction had upended financial markets in 2018 – has risen virtually over night to a more encouraging level.

What factors, if any, could make the wait for a reversal in US monetary policy easier to swallow?

Will the regime change we see affecting inflation and monetary policy keep equity markets humming?

“America First” turns out to be more than just a slogan. It’s actually the name of an unabashed policy that is having a positive influence on US economic sentiment.

Although previously postponed by large-scale fiscal stimulus, the slowdown in the US economy now appears to be gaining traction. And with the Federal Reserve currently unwinding its balance sheet, that’s no laughing matter.

With the eurozone economy catching up, emerging markets still going strong, further abundant liquidity in the system and the recently passed US tax reform, stock markets have shot up to record highs.

Global economic growth has continued to gain traction, with Europe and the emerging world powering the process.

The current environment of moderate global economic growth is conducive to monetary policy normalisation.

The world’s economies are growing in sync, though moderately, with consumer spending playing only a minor part. Emerging markets and Europe stand most to gain from those conditions.

Discover our economic analysis and investment strategy.

Discover our economic analysis and investment strategy.

The UK’s vote to leave the EU boosted the activism of the central banks, which are keen to stave off any slowdown risks and liquidity accidents.

Joint action by the major central banks and the Chinese government has improved sentiment and allowed risk assets to rally, especially in the two powerhouses of global growth: the United States and China.

Find out more on our economic analysis and investment strategy.

China's devaluation and the Fed's prevarication due to the possibility of US activity dipping seem to reflect three major structural developments.