The most recent example comes from the markets’ rather blasé response to the defeat of Trump’s healthcare bill, with equities shrugging off the debacle. Another explanation is that global growth is picking up and therefore the Fed’s tightening of monetary policy doesn’t matter. Indeed, by this yardstick, the euro zone currently has close to the loosest monetary conditions since the creation of the monetary union. Says the note: “Increasing inflation and FX effects have eased monetary conditions in all countries except Japan.”What’s more, the Citi researchers do not expect monetary conditions to tighten in the near future. Says the note: “Looking forward, we should expect average AE (advanced economy) monetary conditions to remain close to current levels.”Loose monetary conditions are, of course, good for risk assets, including equities and also emerging markets.

Source: Mint March 29, 2017 02:15 UTC