(Harvest) We see steady above-trend growth globally in the fourth quarter, with inflation picking up in the U.S. but moving sideways at low levels in the eurozone. The contrasting inflation outlooks suggest further monetary policy divergence.The chart below shows how markets are pricing in less than two 0.25% rate increases by the U.S. Federal Reserve (Fed) through the end of 2018, and a modest rise in European Central Bank (ECB) rates during the same period. We believe the former is too low and the latter not likely.
Opportunities Emerge as Central Banks Diverge
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