Global recovery momentum cresting? – Westpac

According to Richard Franulovich, Research Analyst at Westpac, “Synchronised global recovery” has been a key factor driving global markets in recent months. There’s no doubt that the global economy is on the upswing but a quick stock-take of some key higher frequency data - admittedly mostly “soft data” - suggests global recovery momentum eased somewhat in February, he further adds.

Key Quotes

“Global PMI breadth peaked in November 2017 at 93%. By February 2018 that had fallen to 48%. Our global data surprise index echoes that, edging lower in the new year after hitting levels that are typically rarely sustained late last year.”

“The OECD’s leading indices convey a similar message too. The 3 and 6 mth growth rate of the OECD+BRIC leading index has crested in the last couple months.”

“Volatility across all the major asset classes posted a notable jump in Feb, admittedly in part due to more bullish expectations for growth and what that implies for yields. That said, higher volatility, not to mention the threat of tariffs could potentially weigh on the next round of sentiment surveys due in coming weeks, adding to the impression that global recovery momentum is cresting at very high levels.”