Global macro overview for 23/01/2018

New highs, up trend continuation and more capitalization. This is how the situation in financial markets and the global economy looks like today. Great current data, historically high valuations of companies on the stock exchange, extreme optimism of investors and lack of serious threats on the horizon favor the emergence of bolder forecasts. In the January edition of World Economic Outlook, the International Monetary Fund (IMF) raised estimates of global GDP growth for 2018-19 by 0.2% up to 3.9% annually. The forecasts for major developed economies, especially for the USA, were revised upwards, where the IMF expects an acceleration of growth due to the recently approved tax cut. "The impact of the tax package on the level of production in the United States and the main US trading partners is responsible for about half of the cumulative revision of global growth forecasts for 2018-19" - noted in the report. The IMF estimates this impact at 1.2% by 2020. At the same time, it assumes a lower growth path for several years after 2022 due to the expected higher fiscal deficit and temporary character of some reform proposals.

The IMF states that the balance of risks for global short-term growth forecasts is broadly neutral, but points out that negative factors prevail in the medium term. "High valuations of assets and strongly reduced term bonuses increase the probability of a correction in the financial markets, which could limit growth and influence the moods" - emphasized the IMF. A possible catalyst for negative changes in the financial markets may be a faster-than-expected rise in core inflation and interest rates in developed economies.

Let's now take a look at the SPY (SP500 EFT) technical picture at the H4 time frame. The index has made a new all-time high at the level of 282.61 despite extremely overbought market conditions and growing bearish divergence. The nearest technical support is seen at the level of 280.10.

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