A complement to my recent post on the signal brought by an inverted yield curve on the economic activity.
The Federal Reserve isn’t worried about the yield curve, and it has reason why. The problem: It is pretty much the same reason it wasn’t worried about the yield curve before the financial crisis.
— Read it here www.wsj.com/articles/what-the-fed-is-missing-again-1532268000
The BoE comment on its monetary policy suggests that a rate hike is a possibility at the August meeting as activity is expected to rise. BUT, the momentum is low and even if there is an improvement it will not catch up what has been lost in 2017.
The graph shows the GDP deviation from trend in the UK, EA, France and Germany. The UK was not able to catch the strong EA momentum in 2017 and its internal dynamics was not enough to support growth. Therefore what’s happening at Threadneedle Street? Wishful thinking?