Our Global Markets Overview provides a high level review and outlook each month for markets and economies.
Major asset class views: Equities preferred to bonds
During the last quarter of 2012, the move back to policy easing and consequent improvement in global financial conditions has improved growth prospects, with the US and China responding most. In the US, private demand growth is now well above its trend (of around 2.1%) because financial conditions are very easy and those sectors that respond most to low interest rates (eg households and construction) have improved balance sheets and are more able to respond to stimulation than their equivalents in Europe. Growth in China has also improved, driven by modest amounts of monetary stimulation and increases in government investment spending. Other emerging regions have been slower to pick-up, although this may just reflect a small lag as the improvements in external demand and production work their way through into improvements in domestic incomes.