In the face of this uncertainty, and the unwillingness of major Western central banks to suspend the battle against inflation, investors continued to cut risk, increase their exposure to China’s rebound story and steer cash into liquidity funds.
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Craving certainty, markets get uncertainty
How much longer will the war in Ukraine go on? How much further will central banks go before they deem inflation contained? How much damage will the latest US debt ceiling standoff do? How widely will the benefits of China’s anticipated economic rebound be felt? What direction will Japanese monetary policy take?
Focus on liquidity and yield in early 2Q21
During the first week of April benchmark US equity indexes climbed to new record highs, the IMF forecast full year growth of 6.4% for the world’s largest economy — which added over 900,000 jobs in March – and US Federal Reserve officials reiterated their commitment to highly accommodative monetary policy.