Narrow Path Ahead For Markets

A global economic recovery is underway. Growth has picked up across global markets for about a year, although during that same period markets have also had to contend with bouts of shortterm volatility, with political risk driving much of that volatility.

The Macron victory in the French presidential election, who campaigned on a pro-European platform, should now drastically diminish political risk on the continent and allow investors to focus on its economic fundamentals instead. As political risk dissipates, all eyes are now on central banks and on what they will do to navigate their economies through the different cycles of the recovery. Deflation is no longer the most potent threat facing the global economy. Instead, inflation is likely to take center stage and keep policymakers on their toes in the near future.