These settings remained supportive of strong capital flows to emerging markets. Stronger demand underpinned higher commodity prices, reinforced by strong growth in China. This favourable setting did not last long into the first half of 2018. Expectations of a faster pace of monetary tightening than previously expected began to emerge as the strong US growth was sustained.
The US unemployment rate reached levels below the estimated natural rate, while fiscal policy became more expansionary. This put upward pressure on long-term US Treasury yields, which exceeded 3% for the first Page - 1 - of 9  time since July 2011. Surprisingly, US inflation remained stubbornly below the target of 2% in the absence of significant wage growth.