Fidelity - The third wave of deflation is over

Developed economies have stood up well to the latest wave of deflation emanating from emerging economies that has seen a combined volume and price shock depress global trade and output.

This third wave of deflation (coming after the financial crisis of 2008-9 and the European sovereign crisis of 2011-12) is now over, as is the period of dollar appreciation which was tightening financial conditions.

Indeed, dollar strength has ultimately acted as the catalyst for much- needed central bank coordination that is now easing financial conditions. Fears that the US might enter a recession now look exaggerated and I expect another up-leg in the bull market in US equities.