Financial markets have recovered some poise since mid-February. This may be due to some more encouraging economic data from the US, which has dispelled fears that it is on the verge of a recession. There are also rising expectations of further policy support from the ECB and Bank of Japan, following on from the policy easing already announced by China. However, the most timely data for the euro-zone, Japan and China have been disappointing, suggesting that the global economy is a long way from firing on all cylinders. Finally, the recent increase in core inflation in the US suggests that the Federal Reserve Bank will resume its tightening cycle before long.
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