The world is experiencing one of the longest economic expansions since records began and there’s no end in sight, with muted inflationary pressures keeping interest rates low. Stock markets like this not too hot, not too cold ‘Goldilocks’ backdrop. Growth is strong enough to boost profits, and inflation is low enough to keep monetary policy loose. This was the configuration in the 1990s expansion that ended in the tech bubble. Valuations are getting expensive again and sentiment is high, but the bull market has further to run.

The Investment Clock that guides Royal London’s asset allocation has moved into ‘overheat’ again. Late-cycle tax cuts in the US could stimulate the domestic economy and trigger an unwelcome rise in core inflation. Stocks might correct on aggressive interest rate rises, but it’s too early to worry about recession risks.

The downside growth risk the market isn’t talking about comes from China, where tighter policy is likely to cause a slowdown. Stocks didn’t like Chinese weakness in 2015-16 but, on the positive side, commodity price drops would take the steam out of inflation and elongate the business cycle.

Royal London’s composite investor sentiment indicator is in bullish territory. Investors can sustain a bullish mood for months at a time when fundamentals are improving. Global growth remains strong, unemployment rates are falling in all major economies and business confidence is high.

Trevor Greetham is Head of Multi Asset, Royal London Asset Management.