Business confidence indices in the US and Europe have risen sharply during the last couple of months. This strength has yet to come through convincingly in the harder data. Given the track record of such indicators and the widespread improvement, we believe this signals an imminent acceleration of economic growth in these regions.
Recent data has not led us to change our forecast that the US Federal Reserve will announce a reduction in asset purchases following their upcoming policy meeting on 17/18 September. As bond yields have been pushed up beyond our year-end forecast for 2013 and 2014, we have raised our forecasts for the US and to a lesser extent for the eurozone.