Personal Finance Case Study

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1) Identify several economic trends that will affect U.S. equity and U.S. fixed income markets. Economic growth will boost employment opportunities which in turn will create increased economic activities that will result in higher GDP and increased stock prices. As economic growth improves, flat commodity price and a moderate increase in wages and consumer spending will generate a small gain in global inflation. Job gains in the USA are expected to continue at a moderate pace. This, however, will have a negative effect on corporate earnings. However, increase in household cash flow due to low-interest rates helped consumers to reduce their mortgage payments and consumer debts. This reduces the fear of a recession in next 12 months. The combination of steady economic growth and restrained inflation will prompt central banks to remove their monetary stimulus. Federal Reserve Bank may go ahead with future rate hikes which will impact bonds negatively. 2) …show more content…

Overall positive outlook on commodities reflects our sector-specific views, which range from an underweight for precious metals to a modestly positive view on oil and a more sanguine outlook for natural gas. Although I expect prices for oil to remain range-bound, I believe positive returns from oil are still likely given investors’ ability to roll higher-priced short-term contracts into lower-priced longer-term contracts. I see the greatest potential for price gains in natural gas, given low inventories and the need for strong production growth to provide adequate supplies in 2018. Commodity prices have already shown signs of stabilization. The outlook for economic growth has improved in the US emerging markets, increasing the demand for commodities. Meanwhile, The US commodity markets have gradually moved towards a better balance of supply and demand, evidenced by 2018 strong rally in base metals and stabilization of global energy

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