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Richard Franulovich, head of FX strategy at Westpac, suggests that a few key markets have been trending in a more constructive direction lately, signalling less concern about growth risks with the US bond curve has been steepening, Eurozone financials have been outperforming and the USD has eased, to name several markets.

Key Quotes

“Markets had been signalling that global growth is faltering and policy is too tight for a while, so the trend shift recently is notable. The signal is far from uniform across markets however; breakeven yields suggest disinflation risks is still high, while copper and the ADXY have at best merely stabilised in recent weeks.”

“A simple US recession probability model confirms that it’s far too soon to sound the all clear.”