What’s to blame for moving markets in one direction or another? Trade negotiations? An attack on Saudi Arabia’s oil refining infrastructure and heightened geopolitical/military risk in the region? The efficacy of the latest round of global central bank accommodation? An impeachment inquiry? Earnings reports? Call it “all of the above.”
The Federal Reserve again nudged the Fed funds rate target down another 25 basis points to 1.75%-2.0% in its latest policy meeting. In a sign of just how divided the Fed is over the appropriate policy stance, however, three FOMC members dissented from the decision.
No doubt the difficulty facing the Fed is how much of the broadening economic slowdown is due to concerns over a trade war, or a general deceleration of economic activity that is only partially related to trade, says Prudential’s chief market strategist.
According to PGIM Fixed Income’s G-10 lead economist Ellen Gaske and chief investment strategist Robert Tipp, we may expect to see two rate cuts in the second half of 2019—more than what the median Fed projection has penciled in, but less than the three cuts the market has been pricing in.
Nathan Sheets, PGIM Fixed Income’s chief economist and head of global macroeconomic research, recognizes that uncertainties regarding U.S.-China trade tensions have multiplied and provides perspective based on the question of “what do we actually know?”
Despite the global growth slowdown, QMA projects that the general trend should be up near term, underpinned by central bank dovishness, and reasonably attractive valuations, as detailed in its latest Outlook & Review.
PGIM Fixed Income's Q2 outlook examines the conditions that may affect market performance after a strong Q1, the factors supporting global economic growth, and the forward trends of each fixed income sector.
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