What Can Markets Look Through To

While easing energy pressures may reopen global reflation trades, structural headwinds from deglobalization and defense spending will maintain higher inflation volatility. Key risks center on ECB policy overreaction and a potential US inflation reacceleration if growth picks up.

Key Takeaways

• 1.Fading energy risks could allow global reflation to expand beyond US technology into broader risk assets.
• 2.Structural factors like deglobalization and defense spending will keep inflation volatility and bond term premia higher than pre-Covid levels.
• 3.The ECB and BoE risk policy overreaction by hiking into a labor market that is weaker than the post-Covid peak.

Table of Contents

• Global Macro at a glance
• Growth drivers
• Major risks
• What can markets look through to?
• AI Risk On vs Middle East Shock
• United States
• Euro Area
• China
• Global LIs
• Economic forecasts and central bank watch

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