Slow recovery, IMF forecasts and common movements

Yesterday, quite a few business activity indexes were published in Germany, the Eurozone, the UK and the USA. Indices were for June; therefore, their information was crucial to understand the pace of recovery. Apparently, the recovery process is not explosive, but gradual. At least the indices were below 50, that is, economic activity continues to decline. It is worth noting that indicators came out better than forecasts, which means events are developing not in the worst way.

Given these data, as well as Trump's comments that the US-China trade deal remains valid, the markets were again optimistic and common movements typical to these market sentiments were detected: stock markets were growing, the dollar was declining, commodity markets were strengthening and the currencies of developing countries grew. At the same time some deviations were detected: safe haven assets were mostly increased. We thing this might a signal of reverse in the market sentiments soon.

The positive mood of the markets yesterday was strengthened by the WTO report, which says that thanks to the actions of the governments, the worst-case scenario for the global economy can be avoided. Speaking about the actions of governments, we note that more than $ 2.3 trillion of the total amount allocated by the EU to help companies remained untouched.

We traditionally remain pessimists. The lack of a quick recovery suggests that 2020 as a whole will be exceptionally disastrous for the global economy. So, there is nothing to be happy about right here and right now. In this regard, it will be interesting to read updated forecasts from the IMF on the pace of development of the global economy. The Fund warned a couple of weeks ago that we should expect a worsening of previous forecasts. The whole intrigue is how much worse the forecasts will be (in April, the IMF announced -3% shrink in the global economy by the end of the year).