Investors split over economic outlook

The policy response to the slowdown in the world economy has been swift and substantial, particularly in the US. More importantly, the Fed seems prepared to continue easing until there is concrete evidence that the economy has turned. Despite this, equity and bond investors are split over the economic outlook. Bond markets are still discounting a weak environment as the daily newsflow points to ongoing softness in the economic statistics. On the other hand, equity markets appear to be looking that bit further ahead and pricing in a recovery in the first half of 2002. History tells ...