State Street Global Markets: Confidence corrects, round one goes to the policy makers

State Street Global Markets: Confidence corrects, round one goes to the policy makers

July 9, 2020

United States
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Michael Metcalfe, Head of Global Macro Strategy at State Street Global Markets, discusses how policy makers are winning the battle for animal spirits for now.

“The biggest economic contraction in a century is, for the moment, not dampening animal spirits unduly. The confidence of investors, consumers and businesses in the US normalised further in June. Whilst hard economic data releases are swinging around widely, sentiment measures are now less than a standard error off their historical means. Q3 will bring with it new challenges of elevated expectations, some slippage in policy support and the return of some lockdown restrictions. If one of the aims of policy makers was to prevent a downward spiral in expectations, potentially exacerbating an already terrible economic outcome, then sentiment measures suggest they are winning so far.”

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Source: State Street Global Markets, Bloomberg

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