MONEY MARKET | January 2019

Taxable money market

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Patricia Larkin

Chief Investment Officer,
BNY Mellon CIS

The Middle East has returned to the front pages following Iranian General Soleimani’s death. While oil prices have jumped in reaction, the rise was nothing like the spike that would have been seen prior to the shale revolution which has reduced the Persian Gulf’s share of worldwide oil production. However, any substantial conflict or disruption to major production facilities or shipping lanes would have negative economic effects around the world.

While it is too soon to have official figures for the 4th quarter of 2019, the Blue Chip consensus forecast looks for growth of between 1.5% and 2.0%. This seems reasonable given the continued strength in consumer spending driven by the robust labor market.

The Federal Reserve (the “Fed”) took no action at their December policy meeting and at his year-end press conference, Chairman Powell stated that “Both the economy and monetary policy right now are in a good place”. That sentiment has been echoed by many other Fed policy makers who seemed to indicate that, barring a major change in economic conditions, rates were likely to remain on hold for the foreseeable future.

The unrest in the Gulf just adds another element to what was already shaping up into an uncertain 2020. The Presidential election, the actual arrival of Brexit and details of the proposed U.S.-China trade deal are all factors which investors and central bankers around the world will have to grapple with as the year unfolds.

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Views expressed are those of the advisor stated and do not reflect views of other managers or the firm overall. Views are current as of the date of this publication and subject to change.

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