The weak US non-farm payrolls data for May and uncertainty ahead of the UK referendum on EU membership, scheduled for 23rd June, may push back the next Fed rate hike until July at the earliest, if not September. Nonetheless, we still think that the US economy is on track for steady growth, particularly as personal consumption and industrial production both rebounded in April. In the UK, Brexit fears have taken a toll on the economy and the cost of insuring against sovereign default remains elevated. But provided the UK votes to remain in the EU, activity should pick up in the second half of the year. Elsewhere, the euro-zone and Japan are still struggling, despite a strong first quarter, and China’s recovery seems to have lost some momentum in April.
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