1. Tail risks are receding: the eurozone is holding together, Greece recently got an S&P upgrade, China has executed a soft landing and the U.S., despite its dysfunctional politics, has a number of things working in its favor.
2. Global growth will remain weak: leading indicators are not providing any evidence of an imminent return to trend growth rates in emerging or developed nations.
3. Central banks will likely step up the flood of liquidity and low interest rates will remain in place, as key central banks are set to drop inflation targets in favor of nominal GDP and labor market outcomes.
4. While excess capacity and labor market slack imply that the short-term inflation outlook is benign, shifting central bank policy and stepped-up government intervention may result in a pickup in inflationary expectations in the coming year.