A Global Convergence of Economic Conditions Is Driving the Market Melt-Up
- Co-movements across debt markets around the world at record
- Dollar tumble, soaring assets driven by synchronous output
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There’s a simple way to make sense of the tumbling dollar, the Treasury selloff and the emerging-market boom, all springing in lockstep. Investors are intensifying their bets on synchronized global growth, a dynamic that’s crimping demand for safe assets and fueling convergence trades.
Consider this: Anchored by a stable business cycle, emerging-market and U.S. debt markets are more correlated than ever, Bloomberg data show. That’s hardly surprising to Gabriel Sterne, chief macro strategist at Oxford Economics Ltd. From growth to inflation to fiscal balances, economies danced to a similar beat in 2017, a rare feat in postwar history. That dynamic is now juicing risk appetite this year due to lagged effects.