Union International has reiterated its view that interest rates in the US are unlikely to be hiked this year.
Union International has told clients that the likelihood of an increase in US interest rates during 2015 has decreased amid worsening economic data emerging from the world’s largest economy.
“The latest consumer spending data recorded its largest decline since late 2009 while US factory orders slipped for the 5th month in a row,” said Solomon Roth, chief economist at Union International.
“What makes this all the more worrying is the fact that the huge drop in oil prices hasn’t translated into increased spending by consumers which flies in the face of assertions that low gasoline prices would see people rushing off to the mall to spend the few dollars they saved filling up at the service station,” he continued.
For the time being, the general consensus among investors is that the US Federal Reserve will begin to the slow and steady task of normalizing interest rates but the Osaka-headquartered investment broker-dealer believes the central bank will eventually be forced to keep rates on hold.
“This is not about what the Fed should or shouldn’t do; it’s about what they will do,” suggested Roth. “Investors must position themselves for the continuation of easy Fed policy because Janet Yellen is going to find it virtually impossible to hike rates when there is so much evidence pointing to a slowing or even a stall in economic growth,” he added.
Union International says that a rebound in oil prices toward the middle or second half of 2015 will almost certainly act as an anchor on what is already a decelerating pace of economic growth.
About Union International:
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