Despite the spread of the delta variant of Covid-19, it seems premature to talk about growth ‘concerns’ in the US economy.
On the contrary, the Federal Reserve’s latest Senior Loan Officer Survey underlines the potential upside surprises to the economic outlook.
The pandemic could feasibly have impacted on the long-term growth potential of the economy by crowding out private investment, but this is not occurring, for now at least.
Instead, the recent surge in investment across the US business sector is being treated as a ‘deflation impulse’ by the bond market.
The growing influence of Big Tech platforms, together with climate change risks, provides a better explanation for the recent drift lower in 10-year Treasury yields.
