Even if the US economic environment is less attractive today than it was last year or even six months ago, the US appears better situated in the near term than most other developed and emerging markets. With US inflation in check, the Fed is likely to remain accommodative, lowering its key interest rate again this September, given recent job data and what seems to be loss of business confidence due to the US-China trade war. It also seems likely that the US will be willing to ease monetary policy when other central banks are doing so globally in both developed and emerging markets. So far in 2019, central banks around the world have lowered interest rates 32 times, according to the Bank for International Settlements, to offset what appears to be slowing economic growth as the U.S.-China trade war drags on; futures market pricing indicates many more rates cuts are expected here out.
Meanwhile, Brexit remains a struggle for Europe, while the Argentinian debt crisis and the US-China trade war have spillover effects in Latin America and Asia, respectively. Consequently, the US dollar will likely maintain its strength, even if US interest rates come down further.
Find out how all major markets performed and how we’re positioning portfolios in our Sept. 2019 Flash Report and video.