At the level of final goods prices, as shown by consumer price indices, inflation is low almost everywhere, and few countries report upward pressure. Not surprisingly, this reassuring macro-economic picture has led to a return of confidence to financial markets.
Share markets around the world have risen appreciably from their troughs in early 2003, and in many markets price earnings ratios are well above medium-term averages. A similar return of confidence has occurred in debt markets, where spreads have narrowed to historic lows. Borrowers in emerging market economies can obtain finance on very advantageous terms as investors chase yields.