US economy ready for policy rate normalisation

Rick Rieder, BlackRock CIO of Fundamental Fixed Income, explains why he believes the US recovery is actually stronger than headline data would have you believe. “Many market observers lately have been making some pretty pessimistic evaluations of the U.S. economy, declaring that it’s stagnating and soft. Given this pessimism, which began following weak early 2015 data, it’s hardly surprising that most market watchers interpreted June’s job report as another sign of the U.S. economy’s softness. In my opinion, however, the pessimism is unwarranted and dramatically off-base, creating a distorted picture of the U.S. economy. Indeed, when you look beyond the headline economic data and aggregate nominal numbers the pessimists tend to focus on, you see a solid, and improving, U.S. economic recovery”. As for what this means for the Fed, below BlackRock’s “Yellen Index” of labour market/economic conditions indicates that the US economy is ready for policy rate normalisation. (VIEW LINK)