U.S. economy requires a hike in June – BBH

By FXStreet Analysts at Brown Brothers Harriman explained that the US economy has evolved largely as the Federal Reserve anticipated.

Key Quotes:

“The slowdown in Q4 2015 was temporary; the underpinnings of the economy remain firm. Growth appears to have returned to trend growth in the first quarter.

As long as the labor market continues to absorb slack, which it has, officials should be reasonably confident that core personal consumption expenditures (PCE) will move toward the Fed’s target, which it has. Inflation expectations, as measured by the 10-year breakeven, have recovered from 1.11% in mid-February to 1.55%, which is higher than when the FOMC hiked rates in December.

The global capital markets have stabilized after the rough start to the year. The MSCI World Index of bourses in high income countries has risen nearly 11.5% between February 11 and March 11. The recovery in the MSCI Emerging Market equity index is even more notable. It bottomed on January 21 and since has trended 17.5% higher by March 11 and turned positive on a year-to-date basis.
Another constraint that received a lot of airplay was the strength of the dollar. Since the end of January, a trade-weighted measure of the dollar has fallen by 4.6%, returning to …read more

Source:: FX Street