The world's largest three economies are giving mixed signals - the US is clearly improving, China has stabilised and avoided a hard landing and Japan looks to...

The world's largest three economies are giving mixed signals - the US is clearly improving, China has stabilised and avoided a hard landing and Japan looks to be in contraction territory once again. Clearly, the US growth rate is overstated with the large rise in inventories, but the rise in business investment is a welcome development. The key for the global economy remains the US Fed, who have a policy bias of letting inflation rise by tightening too late, rather than harming the recovery by hiking too early. As such, policy is still likely to remain at ultra-low levels for a considerable period yet, with tapering to end in October, then the US central bank need to drain around USD3.4 trillion from the US short-term money market before it can move official rates higher in 2015. Read the daily market insights on this link (VIEW LINK)