«Bad» good news.

2023 has been marked by a high level of global economic uncertainty. Greater persistence of inflation, signs of a more contractionary monetary policy than anticipated in the developed world and latent recession risks are risks in the focus of

investors.

Thus, for some, we face a paradox: better economic data would be negative for the market to the extent that it would force central banks to continue with

the contractionary rate cycle for longer, hindering a recovery and hurting asset valuations. However, beyond the sensations, studies show that on average there is a positive correlation between market performance and economic surprises.

Thus, the moderation of inflation, the resilience of the labor market and the upward revisions of economic activity, especially in the U.S., even if they cause short-term volatility, are desirable in the medium and long term for financial assets in aggregate.

It is impossible to predict the impact each specific economic data point will have on the markets but, if we have to choose, may the “bad” good news keep coming.