April Global Macro Monthly - Inflation to rise, but how fast and for how long?

21 April 2021 (7 min read)

Key points

Virus and vaccines continue to drive growth outlooks. China saw a slower first quarter, but we raise our annual outlook. The Eurozone faces several downside risks, but the outlook is brighter in the UK. Emerging market developments are mixed.
US activity has also been supplemented by additional fiscal stimulus. We raise our annual growth forecast again. Yet inflation is only expected to rise gradually to target after volatility in 2021.
The Fed has convinced markets of long-term accommodation for now. The European Central Bank continues to deliver faster Pandemic Emergency Purchase Programme purchases.
Bond yields have fallen despite ongoing fundamental concerns, in part reflecting the cost of short positions. This has also allowed a bounce in EURUSD. Credit markets have proven a good steer to equity markets and continue to suggest supportive risk outlook.

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