Global GDP is expected to grow at 3.4 percent in both 2017 and 2018 before gradually tapering off a bit in our newly added column for 2019. As the picture gradually brightens, the central banks of the developed world are in various stages of policy normalization. The Federal Reserve and the Bank of Canada represent one end of the spectrum with both of these North American banks underway with rate increases.
The European Central Bank is arguably next in line as it readies the Eurozone for a dialing back of its asset purchase program later this year. Rate increases from the Bank of England are not expected this calendar year but should come into focus in 2018. The Bank of Japan (BoJ) is perhaps the only exception as it maintains a public profile of pedal-to-the-metal accommodation for the foreseeable future.
However, even the BoJ will perhaps have less urgency around its yield targeting objective as global rates rise. Around the world, the economic indicators have been mixed but if there has been a pattern emerging it is one in which numbers are coming in a bit better than expected. That is certainly true for Japan and Canada, both of which have reported significantly stronger GDP growth in the second quarter than the consensus had expected.