Market gloom and doom over United States consumer confidence is overdone, according to BNP Paribas Fixed Income. Leading indicators were pointing to a synchronised global economic recovery despite the continued slump in equity markets in the wake of US corporate accounting scandals, BNP Paribas chief Euroland market economist Ken Wattret said. 'There's a possibility the US labour market could perform rather better, leading to an increase in consumer confidence and off-setting the stock-market declines,' Mr Wattret said. Worse-than expected US consumer sentiment figures released at the weekend caused a sell-off in European and US markets. The University of Michigan's preliminary consumer sentiment index fell to its lowest level since just after the terrorist attacks on September 11 last year. Mr Wattret also pointed to the recent manufacturing strength. 'Certainly at the moment there is probably going to be an export-led recovery in Europe led by the strength of the US manufacturing zone,' he said. BNP was relatively conservative about the continued strength of the euro against the US dollar - targeting a medium-term 1.05 to 1.07 euros to the dollar - as 'we think the currency is benefiting from bad news from the US, not from good news from Euroland'. 'I'm not going to tell you it's going to be sunshine tomorrow [because] it won't be sunshine tomorrow - but what we are saying now is that the bad news is already being discounted [in the financial markets],' Mr Wattret said, adding there would be little more bad news to price in. Interest-rate strategy head Cyril Beuzit expected to see stabilisation in the stock market before the end of the third quarter as investors returned to look at the valuations of equities. 'We're quite confident in September we should see a turning point in the fixed-income market and we expect yields all along the curve to be higher than the current level,' Mr Beuzit said. Bond yields would rise in the US, Europe and Japan; 'for the moment you still want to favour bonds over stocks'. Also yesterday, the Hong Kong Investment Funds Association said May recorded the biggest monthly inflow into bond funds this year, at US$1.11 trillion with net inflow US$430.91 million.