Gerard Baker from across the pond

Here is a good analysis of what might be happening in American economy.

But fourth, and most important, the US economy may be in more robust shape than people had feared. Until recently, forward short-term interest rates were pointing to a significant slowdown in the US economy late this year, driven by a weakening housing market. But that looks less likely now. Markets are still expecting a softening, but its timing and severity are both now in considerable doubt.

And that may be the largest truth in the events of the last week. The reversion of the US interest rate curve to a more normal shape — upward sloping at a gentle gradient — far from presaging a disaster, may simply represent market recognition that the outlook is actually rather good for the American economy. When you’re growing, ceilings might just have to be broken.