“We are seeing signs of the global expansion becoming more synchronised and thereby self-reinforcing. This is consistent with our view that the US-led reflationary phase has further to run. Highlights in our special, expanded Macro Outlook to start the new year include:

• Reflation has arrived. US wage gains are feeding higher inflation and solid consumer spending, supporting profits in the face of rising labour costs.
• This has been far from a typical recovery: Healing the post-crisis economic wounds has meant US businesses and consumers took longer to regain confidence and animal spirits. These now seem to be revving up.
• Tightly integrated financial markets and global structural forces, including high world debt levels, should anchor US yields.
• We see risks. US president-elect Donald Trump has raised hopes on looser fiscal stimulus, but the make-up of any changes is key.”

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