Fundamentals are on investors minds heading into February, with big tests in the coming week about jobs and inflation. Overall, the first month of the year has been a good one for investors willing to take on some risk.
Despite weakness in emerging markets, global equities have been gaining at a - most likely unsustainable - rate that would produce one of the best years in the past 40. Assets such as short-term high-yielding bonds are also in favour while supposedly safe-haven developed market sovereign debt has suffered.
This is all based on a consensus that arose towards the end of last year that leading developed economies - the United States, the eurozone and even Japan - were likely to become more dynamic.
It has prompted a significant shift by investors away from potentially overbought emerging markets into developed ones. But it is also dependent on underlying evidence that the big economies are improving and that consumers - the ultimate arbiters - will see this and act accordingly by spending.
Friday's US growth data will have added to the view of slow but steady improvement.
The coming week will be more about the way improving growth has filtered down to consumers. The big data release, as usual, will be the US jobs report on Friday, but the eurozone employment picture will also be on view on Tuesday. Employment growth tends to lag the wider recovery, but to date it has been anaemic, prompting a degree of volatility.
"It is a fairly shallow jobless recovery, and that will make markets move up and down," said Franz Wenzel, a strategist with AXA Investment Managers in Paris.
Despite the renewed growth hopes, meanwhile, there are severe underlying imbalances in many developed economies that may rise up to haunt investors betting on overall improvement.
The International Monetary Fund said in the past week that the United States and Japan needed to spell out credible deficit-cutting plans before financial markets started punishing them by selling off their bonds.
Ratings agency Standard & Poor's went as far as cutting Japan's long-term debt rating and Moody's Investors Service warned that the risk of the United States losing its top AAA rating, although small, was rising.
This is disturbing talk for investors and has already prompted strong downward pressure on Japanese assets such as the yen and stocks even though some, like Goldman Sachs, have recently been encouraging investors to invest in Japan.
The flip side of growth is inflation, and this too is becoming a worry for some investors. Some of the recent shift into developed market equities, for example, has been promoted by fears of central bank tightening in emerging markets as a result of sharp price rises. Inflation in the eurozone may be the new concern, with data due on Monday and a European Central Bank meeting on Thursday.
Some policy makers have already been firing warning shots, in particular, Lorenzo Bini Smaghi, one of six ECB board members. The prospect of higher eurozone interest rates drove the euro higher against other currencies - a potential problem, if sustained, for exporters - and promoted bond yields to rise.
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