Our views

Milton Friedman once compared hapless central bankers who fail to appreciate the lag between monetary policy and inflation to a “fool in the shower.” At first the water is too cold, so the shivering fool turns up the hot tap until he is enveloped in a scalding jet of steam. He frantically cranks up the cold, only to end up doused in a numbing stream of ice water.

Europe has dodged an economic bullet. Worst-case fears of a crippling energy shortage have vanished and investors have revised down the growth and inflation risks they were pricing into European markets. But while this is unambiguously positive for European growth, the implications for eurozone inflation are less straightforward.

If Thursday's inflation report turns out to be in line with market expectations they will clearly reinforce the Goldilocks narrative that I ridiculed earlier this week. So what if I am wrong? What if the market is right to believe in Goldilocks?

China’s reopening from Covid containment is hammering the property market. While sales are likely to remain weak through at least December and January, Rosealea argues that after the initial wave of infections passes, the reopening should give homebuyers more confidence and provide a meaningful boost to sales and construction next year.

As 2022 enters its last weeks, a range of indicators point to an unfolding slowdown across the developed world. If this were a normal cycle, the recession call would make itself. But this is not a normal cycle, argues Louis, since China is set to emerge from three years of crushing lockdowns.

Since the peak of the bond bull market on March 9, 2020, a constant duration 30-year US treasury has delivered a total return of -50%. Charles asks whether developed world bond markets are now worth buying. The answer is a resounding no.