The Group of Eight summit in Italy this month concluded it's too soon to withdraw measures that have seen some US$2 trillion spent worldwide, because the global economy remains weak.
But the moment must soon arrive. The Chicago Board Options Exchange Volatility Index, or VIX, a market volatility measure known as Wall Street's "fear gauge," has eased to its lowest since Lehman Brothers failed. Prices of commodities such as copper have soared this year.
China's economy grew 7.9% year on year in the second quarter. The nation with the biggest single exposure to U.S. Treasuries is stoking domestic activity with increased spending. Housing starts rose 12% year on year in June.
Beijing has boosted its foreign exchange reserves to more than US$2 trillion, according to data this month. China's State Administration of Foreign Exchange relaxed rules for Chinese companies investing offshore.
But there are still risks in the global economy, and big questions about industrialised countries' path out of recession.
The OECD predicts its 30 members' economies will shrink 4.1% this year, but will stage a tepid, sub-1% annual growth recovery next year. Inflation is in nobody's sights.
In New Zealand, CPI inflation of 1.9% annual is back within the Reserve Bank's target range and Governor Alan Bollard's forecast track is for inflation to remain under control through 2011, when he sees it at 2.3%.
The risk that he's flagged twice in the past month, though, is of people getting the scent of recovery and rediscovering their fondness for debt-funded spending, especially with foreign liabilities rising to 141% of GDP.
Underscoring that concern, Fitch Ratings has put the sovereign credit rating (AA+ on foreign currency) on negative outlook, citing the current account gap at 8.5% of GDP, lacklustre productivity, and timid efforts to strengthen the national balance sheet.
Nonetheless, credit is just a bit easier and asset values have fallen. Are growth assets such as equities at more attractive valuations now? Possibly on a long-term valuation. Will prices rise? Depends on your horizon. Is it too soon to jump in? Maybe.
That's certainly the view in New Zealand. If you were in any part of Asia at the moment, apart from Japan, you'd be seeing green shoots everywhere and thoughts would be turning to life after recession, when the old economic pressures like inflation come back.
In this region, Japan, Australia and Thailand have signaled plans to sell inflation-linked bonds, the first such sales since the collapse of Lehmans in September.
Demand at this month's US$8 billion auction of U.S. inflation-linked bonds, known as TIPS, was the highest in nine years.
In the US, progress has already been made toward recovery. GM and Chrysler have undergone rebirth, banks are repaying TARP funds and showing profits. Securities oversight is being tightened.
Meanwhile, Goldman Sachs Group has posted record second-quarter earnings by managing bond and stock sales and from trading. That's the sort of anecdote bulls seize on.
Here in New Zealand, Bollard's next Official Cash Rate review is due on July 30, and nothing's happened on the home front to derail his prediction that a "slow, fragile" recovery in New Zealand's economy is likely towards the end of the year
"Some form of recovery is now on the horizon," he said on July 14. "The onus is on households to constrain their spending and repair their balance sheets."
In that environment, defensive investments will only slowly give way to growth assets.