Buttonwood: Overcoming their fears

Posted: March 18, 2016 in economy
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A hollow superpower

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Investors may expect slower growth, but not a recession

INVESTORS have recovered some of their confidence. In the first six weeks of the year stockmarkets plummeted, but in mid-February the S&P 500 index began a rally which has regained most of the lost ground (see chart). Emerging markets are back where they were at the start of the year. Another sign that markets are less fearful is the declining yield on speculative, or junk, bonds, which dropped from 10.2% on average on February 11th to 8.5% a month later.
The two big worries in January and February were that the Chinese economy was slowing fast and that the Federal Reserve might therefore have miscalculated when it pushed up interest rates in December. Perhaps the global economy might be heading back into recession.

Those worries have not completely disappeared: forecasts for economic growth are still being revised down. The OECD, a think-tank, predicts that global growth will be 3% this year, below its previous …

via Economic Crisis http://ift.tt/1Z5kTqG


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