Cardinal Quarterly – October 2018

MARKET OUTLOOK – The Federal Reserve has signaled strongly that short term interest rates will move higher, probably by at least three more hikes to 3%, and now that NAFTA worries have been put aside, we expect that the Bank of Canada will not be far behind. We expect long-term rates to move higher as well, probably over 3.5%  on the U.S. 10 year.

Jamie Dimon, the CEO of JP Morgan (one of our holdings) said he is surprised  when people can’t believe that interest rates are rising. We share this sentiment.  U.S. economic growth has been accelerating, unemployment is at record lows,  and higher oil combined with tariffs are starting to push supply chain costs higher. All of these factors put pressure on the Central Banks to raise interest rates.

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