KING OF PRUSSIA, Pa.,
July 18, 2019 /PRNewswire/
-- Markets recorded their best June performance in decades and
welcomed a recent change in tone from the Federal Reserve ("Fed"),
but investors could be disappointed by strengthening economic data
if the U.S. central bank chooses a less accommodative policy,
according to the Investment Insights by BNY Mellon's Lockwood
Advisors, Inc. ("Lockwood").
Despite the rally last month, markets have only marginally
pushed above all-time highs set in 2018 and now stand very close to
the valuation highs established last year.
"Markets now expect that global central banks are on a path for
a coordinated global easing cycle, but that expectation has also
become a risk for investors," said Matthew
Forester, chief investment officer at BNY Mellon's Lockwood
Advisors and the author of the report. "The Fed will likely attempt
to characterize any rate cuts in the second half of 2019 as
'insurance' designed to maintain the continued expansion, now the
longest since the Civil War.
"The best-case scenario for markets would be for some modest
recovery in U.S. and global economic data in the second half of
2019. This outlook could turn brighter if there is resolution to
the trade conflict between the U.S. and China."
Highlights from the report include:
- Keep an eye on the correlation between stocks and
bonds
The relationship between stocks and bonds typically
begins to change when markets detect a greater concern about the
level of economic output. The correlation between these asset
classes—as measured by the S&P 500® Index and the
Barclays U.S. Bond Aggregate Index—is beginning to trend lower
after a long stretch of elevation.
- Managing inflation expectations
Recent data from the
New York Fed shows that consumers' expectations for inflation have
declined meaningfully since late last year. If inflation continues
to surprise to the downside, the Fed could respond to this
challenge by providing additional stimulus.
- Be wary of high-yield credit in market downturn
While many investors have moved into uncharted waters to reach for
yield, it's important to note the specific characteristics of
bonds, particularly in periods of market stress. In such an
environment, for example, high yield credit could decline in a
similar fashion to equity investments.
- Think long term
Advisors and investors should always
manage to their longer-term goals and, so far this year, markets
have continued to climb despite a cloudier outlook. The relatively
benign current market conditions offer an opportunity to reexamine
fixed income and portfolio allocations to consider whether they may
provide enough ballast for changes to market conditions over the
balance of 2019.
For more information on these trends, please
visit www.pershing.com to view the full report and relevant
disclosures.
This material is intended for informational purposes only and
does not constitute investment advice or an offer or solicitation
to purchase, hold or sell any securities. The opinions expressed by
Lockwood are as of July 2019, and may
change as subsequent conditions vary. The information and opinions
contained in this material are derived from proprietary and
nonproprietary sources deemed by Lockwood to be reliable, but are
not necessarily all inclusive. This material may contain
forward-looking information that is not purely historical in
nature. Such information may include, among other things,
projections and forecasts. There is no guarantee that any forecasts
made will come to pass. Reliance upon information in this material
is at the sole discretion of the reader.
About BNY Mellon's Lockwood Advisors, Inc.
BNY Mellon's Lockwood Advisors, Inc. is a leading provider of
managed account solutions. As a program sponsor, Lockwood offers
access to some of the industry's leading investment managers,
provides research on separate account managers, and develops
advisory solutions to help investment professionals meet the
diverse needs of their clients. Lockwood also offers discretionary
portfolio management solutions through financial institutions and
independent registered investment advisers. Lockwood Advisors, Inc.
is an investment adviser registered in the United States under the Investment
Advisers Act of 1940, an affiliate of Pershing LLC and a subsidiary
of The Bank of New York Mellon Corporation (BNY Mellon).
About BNY Mellon's Pershing
BNY Mellon's Pershing and its affiliates provide advisors,
broker-dealers, family offices, hedge fund and '40 Act fund
managers, registered investment advisor firms and wealth managers
with a broad suite of global financial business solutions. Many of
the world's most sophisticated and successful financial services
firms rely on Pershing for clearing and custody, investment and
retirement solutions, technology, enterprise data management,
trading services, prime brokerage and business consulting. Pershing
helps clients improve profitability and drive growth, create
capacity and efficiency, attract and retain talent, and manage risk
and regulation. With a network of offices worldwide, Pershing
provides business-to-business solutions to clients representing
more than seven million investor accounts globally. Pershing LLC
(member FINRA, NYSE, SIPC) is a BNY Mellon company. Additional
information is available on pershing.com, or follow us on Twitter
@Pershing.
ABOUT BNY MELLON
BNY Mellon is a global investments company dedicated to helping
its clients manage and service their financial assets throughout
the investment lifecycle. Whether providing financial services for
institutions, corporations or individual investors, BNY Mellon
delivers informed investment management and investment services in
35 countries. As of June 30, 2019,
BNY Mellon had $35.5 trillion in
assets under custody and/or administration, and $1.8 trillion in assets under management. BNY
Mellon can act as a single point of contact for clients looking to
create, trade, hold, manage, service, distribute or restructure
investments. BNY Mellon is the corporate brand of The Bank of New
York Mellon Corporation (NYSE: BK). Additional information is
available on www.bnymellon.com. Follow us on Twitter @BNYMellon or
visit our newsroom at www.bnymellon.com/newsroom for the latest
company news.
Sanuber Grohe
+1 201 413 2247
sanuberbilguvar.grohe@pershing.com
View original
content:http://www.prnewswire.com/news-releases/markets-looking-past-june-performance-to-clarity-on-economic-data-feds-next-move-300887454.html
SOURCE BNY Mellon