By D.C. Stribling
T. Rowe Price’s Midyear Market Outlook, which was released on June 25, is predicting “favorable” economic conditions for the rest of the year, though volatility is likely to continue. High valuations across most global asset classes and a range of economic and policy risks—including the threat of trade protectionism, growing by the day—create the potential for volatility to persist moving into the second half of 2018.
The growth outlook is most robust in the U.S., where confidence remains high on the heels of last year’s tax cut legislation for individuals and corporations, the report asserted.
Earnings growth is strong and not expected to slow dramatically over the next few quarters, but likely peaked during the first half of this year. Other recent reports have offered similar findings about the longevity of the current expansion.
“The fundamental environment is great, but it’s not getting any better,” said Rob Sharps, head of investments & group chief investment officer in a statement. “Risks are rising, and investors should consider positioning their portfolios a little more conservatively at the margin, but not overdo it.”
Sharps added that the economy isn’t at the end of a bull cycle, “but if you take a multi-year view, you should probably expect lower returns going forward than what we’ve experienced over the last couple of years.”