Reflation Redux

After bolstering markets for most of the second half of last year, the reflation theme had actually dwindled during the first part of this year. Growth was still good and broadened out further, while politics turned for the better (or less worse). However, the resulting tightening in labour markets and rebounding corporate profits did not translate into stronger price pressures or rising wages. And without the “nominal” part of the economy coming back to life, the reflation narrative continued to look a bit crippled in recent months.