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Better but not Good

First published:, 06/05/14

The latest edition of the IMF’s World Economic Outlook carried the rather cumbersome subtitle ‘Recovery Strengthens, Remains Uneven’ in a sort of good cop-bad cop allusion. Put another way, the IMF’s economists draw comfort from the weakening headwinds to the global recovery, but they harbour lingering concerns about the nature and characteristics of what is, to be blunt, nothing more than a cyclical economic pick-up.

It certainly is a mixed picture. Equity market levels remain elevated, but they have succumbed to a lot of sectoral volatility, and there remain continuing doubts about earnings momentum. Bond markets have confounded those who thought Fed tapering would cause a sharp rise in yields, but since markets are now starting to discount policy rates going up over the next 12-18 months, it would be complacent to imagine that this might happen without market consequences…“more:”