"Markets may have corrected but economies haven’t. Monetary policy remains supportive of economic growth. Let’s not get hung up on whether the Fed’s Quantitative Easing (‘QE’) is going to be $85bn or $65bn in September. In fact, global monetary conditions are easing, due to the $80bn per month in Japanese QE. The strengthening US economy is simply passing the baton to other economies.
Both the US and Japanese economies are showing undeniable signs of life, which is connected with investors’ other concern: rising bond yields. This is inevitable: it’s called “normalisation” because it’s normal. Markets, rather than economies, are suffering increasing levels of distress. It’s risk-off but, this time, without any real increase in risk."
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Chris Darbyshire, Chief Investment Officer, Seven Investment Management