3 things to expect as the global reflation dust settles

SINGAPORE (May 9): Private investment manager Brandywine Global, a Legg Mason affiliate, is expecting the current period of “remarkable reflation” in the global economy to settle down to a “more gradual, but self-sustaining” economic expansion.

The shift in investment narrative comes on the back of strong policy stimulus measures including a dramatic credit impulse from China; deferred tightening by the US Federal Reserve; dollar stability which has permitted the emerging world to join in policy reflation and has hence taken the edge off deflation; as well as persistent monetary expansion in Europe and Japan.

Mexico favoured; sterling among ‘cheapest’
“The combination of the stable risk-free fixed income benchmark and better global growth has been ideal for emerging economy bond markets and their currencies,” write managing directors/portfolio managers Stephen S. Smith and David F. Hoffman in the latest Brandywine Global report for 1Q17.

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