by BCA Research
Financial Sense
The confluence of a more dovish Fed since mid-February and evidence that China’s policy stimulus is stabilizing growth there has been instrumental in lifting risk assets over the last quarters. Two macro dynamics are critical to the outlook for the longevity of the reflation trade: 1) Chinese policymakers’ ability to wean the economy off its dependence on credit without torpedoing growth there and in the rest of the emerging world, and 2) the Fed’s reaction function to how global growth and easier financial conditions impact the US outlook.