I'm Debbie Cunningham, Chief Investment Officer and Executive Vice President of Federated's Liquidity Portfolios.
What is your outlook for the second half of this year?
The second half of the year is currently in flux. Basically, we're reviewing three major portions to consider where we stand from an outlook perspective. First and foremost would be, what the economic conditions in the marketplace are. You still have a fairly strong labor market, a fairly strong industrial market, yet there are questions about whether the strength in those markets will continue. From an inflationary perspective, 2% inflation has been the target and continues to the be the target and is being met. So, it's not necessarily above inflation but not below inflation either. The second consideration when looking at our outlook would be what's happening from a supply perspective in the marketplace. And on an issuance and supply basis in the treasury market, it's been healthy. Not as strong as the supply that we saw in the treasury market in 2018, nonetheless a fairly positive market in the first quarter, and although we paid down some in the second quarter, it's still overall a positive outlook and impact to the economy and our expectations from an outlook standpoint. The third issue, really, has to do with what's happening from a standpoint of global issues in the marketplace. So you've got various considerations that would include the China situation, the Mexico standoff, immigration issues, various trade concerns. All of those spell doubt about the continuing strength in the economic recovery and the global sense that that has had across and the impact on the liquidity markets in that sense. So all three of those would lead us to a conclusion that we are in flux, nonetheless we do think the outlook for the Fed continues to be on hold and patient, but with the likely next move now being one of a decreasing rate environment, rather than one of a continuing increasing rate environment.
Disclosure Views are as on June 5, 2019 and are subject to change based on market conditions and other factors. These views should not be construed as a recommendation for any specific security or sector. Federated Investment Management Company 19-10091 (6/19)