What will 2016 bring for the world economy? Financial markets are sending mixed messages: There is no reason to believe that the US will outperform other major developed countries, but also must be careful about the health of US companies.
The US Federal Reserve and other central banks still keep interest rates low to stimulate growth, a big question is which economies will expand fast enough.
Expected rate of three-month deposits in US dollar to reach 1.24% in December 2016 to a gain of around 0.64%. That exceeded forecasts for the Eurozone, UK and Japan.
At the same time, however, credit derivatives markets - which provide a kind of insurance against default show concern for US corporations. The cost of five-year insurance on $ 10 million of debt issued by US companies totaled almost $ 89,000, more than $ 22,000 from a year earlier. This is a greater rate of increase in Europe, Japan and the rest of Asia.
The robust expansion of the United States is crucial for the rest of the world, given the slowdown in China and the painfully slow recovery in Europe. Yet the largest economy on the planet still shows signs of weakness, and may be unusually vulnerable to rising interest rates. This is a signal that the central bank should act more cautiously, and be ready to change course if in 2016 out of the drawn plan.
E.Dimitrov JrTrader
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