Even the potential for a cut in oil production from Saudi Arabia and Russia hasn’t swayed energy markets. Oil continues its decline. Despite recent stock rallies, the Dow is down more than 8% so far this year.
With continuing pressure from outside the United States, it seems hard to justify another rate hike. But then, we didn’t see much reason for the first hike. Falling yields have boosted bond valuations and helped our portfolios, but also limited buying opportunities. Bond investors are holding tightly to their safe havens. A rate move in either direction will have upsides for Cooper Capital portfolios – a cut would keep valuations and interest payments high, while a hike would open up markets and create buying opportunities.
Though either move would be fine, we find it more likely that rates will remain where they are or go back down. U.S. economic indicators have, for the most part, remained upbeat, but are likely to soon feel the effects of the global slow down.
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