Investors have swooned at the good news. Since early October European shares have risen, with optimists declaring an end to the continent’s energy crisis in sight. Chinese stocks have jumped at recent talk that Xi Jinping will abandon his “zero-covid” policy, and as regulators have loosened their curbs on the property sector. On November 10th, on the news that America’s consumer-price inflation had come in slightly below economists’ expectations, the tech-heavy Nasdaq index rose by 7%, one of the biggest daily moves ever, as investors priced in lower interest rates.
But take a step back, and the outlook for the global economy has in fact darkened in recent weeks. The economy is slowing, perhaps into a recession, as central banks ramp up interest rates to battle a once-in-a-generation surge in prices. Even with one month of better-than-expected data for America, there is scant evidence inflation is anywhere near defeated. Indeed, in much of the world it is broadening out.