Recently we noted interest rate expectations on both sides of the Atlantic and how markets predict no rise in base rates from either the U.S. Federal Reserve or the Bank of England until 2014 at the very earliest. Indeed the central banks themselves appear to be implying this.
Perhaps this implication is meant to reassure markets that monetary policymakers will do everything they can to assist the fragile recovery? The optimism we spoke of last week is not shared by everyone, and central banks will be keen to ensure that nothing they do dents confidence in any way.
But leaving my opinion aside, can we point to market indicators that suggest the economy is beginning to be viewed in a more positive light? To borrow a historic phrase, yes we can. As always, it comes in the shape of the Treasury yield curve.
A low point for investors was last autumn, when the euro zone crisis looked terminal to many and the geopolitical situation over Iran was tense (more on that below). Added to that, investors did not have 3-4 months of positive U.S. jobs performance to raise their spirits, as they do now.Page 1 of 4 | Next Page