Outlook for Investment Markets
Markets have been dominated by fear of a weaker-than-anticipated economic recovery in the United States, resulting in large gains for fixed interest (particularly government bonds) and sharemarket selloffs. The economic concerns appear overdone, partly because the US does not look likely to relapse into recession, and partly because the rest of the world is not weakening (Germany has grown far faster than forecast, and the major emerging markets are growing very strongly). Investors could well continue to be over-focused in the near term on the US outlook, but eventually the poor value on offer in bond markets and global recovery will see a reversal of the past month's developments.
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