In case you missed it Asia-Pac:This week’s highest IP &Conviction

The global economic recovery has gathered pace over the past three months,with industrial production growth increasing to a boom-like 5?% (3m/3m saar).

While growth has been improving for 2 years, to us the past month has seen afundamental change in market psychology, as incrementally better news finallyfocused minds on the gradual reflation underway. While risks remain, we thinkhigher interest rates and increased volatility is a natural reflection of the betteroutlook for growth and inflation this change of sentiment brings, and isconsequently unlikely to derail the recovery.

The logic of ironclad laws is unassailable. They cannot be bypassed and mustbe obeyed. Apart from base effect, sectoral balances are among the fewcertainties in economics. All sectors (private, public & external) must balance tozero. We are not convinced the Trump administration is thinking in sectoralterms, but they are among the most powerful forces driving economies and assetclasses. As the US unveiled budget and infrastructure plans, they had essentiallyguaranteed much higher and persistent public sector deficits and treasuryissuances. Although it is doubtful that either budget or infrastructure proposalswould survive in their current form, annual issuance could easily exceed US$1trillion pa through 2018-20 and most likely beyond.