Investors reassess the outlook for rates

Increased optimism about the economic outlook, buoyed by the announcement late last year of further policy stimulus, has helped the US equity market move a little higher since the beginning of 2011. Most commodity prices (with the notable exception of gold) have also continued to rise. However, this has fuelled near-term upward pressures on inflation and led investors to reconsider the prospects for monetary policy, especially in the UK and the euro-zone. The dollar has suffered accordingly.