Research Team at BBH, suggests that the fears of the US was falling into a recession were greatly exaggerated. Key Quotes After slowing to a revised annualized pace of 1% in Q4 2015, the US economy is returning to trend growth. Incorporating the employment and trade figures released at the end of last week, the Atlanta Fed says the economy is tracking 2.1% growth in Q1. “Without relying on revolving credit to finance consumption, households are forced to rely more on current income. The continued improvement of the labor market is critical. The fall in average hourly earnings in February was disappointing, but we are persuaded that it reflects a quirk in when the survey is taken relative to when bimonthly paychecks are received. If this is correct, then consumption may hold up better than the earnings data may suggest. The quirk may be repeated this month, but come the spring, as the June FOMC meeting comes into view, the earnings data should snap back. The increase in risk appetites has taken place alongside a reassessment of Fed policy. This is reflected in the 13 bp increase in the implied yield of the June Fed Funds futures contract over the past three weeks. At 45.5 bp, the June contract implies almost a 2/3 chance of a hike at the mid-year meeting. Offsetting perceived increase in the chance the Fed is not one and done that so many had thought is the increased confidence that China, the eurozone, and Japan will be providing additional support. China has cut required reserve ratios, which frees up the equivalent of over $100 bln.” For more information, read our latest forex news.