Markets are too tranquil for their own good

0
324

A worker pours hot metal at the Kirsh Foundry in Beaver Dam, Wisconsin, April 12, 2018. REUTERS/Timothy Aeppel

Exceptionally strong U.S. economic reports no longer surprise investors. Meanwhile, measures of market volatility suggest asset prices are expected to be serene in the months ahead. Taking good things for granted can, however, be dangerous.

The Citi Economic Surprise Index reflects how prevalent optimism has become. The gauge shows U.S. data is overshooting expectations by small margins even though the U.S. economy grew at an annual rate of 6.4% in the first quarter, the second-fastest growth rate since 2003, and there’s every sign the boom will continue. For example, the Organisation for Economic Co-operation and Development on Tuesday upgraded its U.S. growth forecast for the whole of 2021 to 6.9% from 6.5% previously.

With the economy roaring ahead and Federal Reserve Chair Jerome Powell’s foot still on the accelerator, expected…

Read more…