US not ready for rapid rate hikes
The key risk to the global economy is that the Federal Reserve embarks on a rapid tightening cycle, at a time when growth in US industrial production and other indicators of manufacturing activity are stalling and/or tipping over, and when growth outside of the United States remains anaemic. The US 10 year Treasury bond yield of 1.85% suggest that inflation expectations are well anchored and that the US economy is not ready to withstand a series of rapid rate hikes. The other key risk is the vulnerability in the property development sector in China. Many of these firms have high gearing at a time when their profitability has been deteriorating. Some have also significant US dollar denominated debt with little or no revenue earned in US dollars, and thus remain exposed to the prospect of further US dollar appreciation.