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Greg Gibbs, Analyst at Amplifying Global FX Capital, points out that it seems not so long ago that investors and policymakers were confident in a more sustained and synchronised global economic recovery.  

Key Quotes

“Global bond yields were rising supported by rising commodity prices, tightening labour markets, fiscal expansion, a steady pace of rate hikes in the US, and some other central banks, and expectations that the ECB would end QE in September and rate raise rates by mid-2019.”

“Investors may be wondering how such a positive outlook could dissipate so quickly.   Many may be wondering if we are getting too caught up in risk factors, and the underlying trends in the global economy should eventually reassert their influence and restore investor confidence.”

“It might be argued that political leaders have been emboldened to pursue their risky agendas by the stronger economic background.   If faced with an investor backlash, they may pull back.   However, we are witnessing hardened political populist agendas in the US and Italy; the same that pushed Britain into Brexit.   The basis for global and regional cooperation appears much weaker than for some time.   The tail on the probability distribution to the left is starting to look much fatter.”