June 30, 2017

Oil prices should increase in the 2nd half of 2017 from the current level of US$ 46-47/bbl as the economy continues to grow. Employment should also continue on its growth curve in spite of the fact that it has reached its so-called full employment level.  Consequently, the labour market appears to be tightening paving the way toward a gradual increase in the rate of inflation. At present the rate of inflation, somewhat influenced by low commodity prices, continues to be below the 2% threshold, a level that makes it difficult to see central banks increase their discount rate, this, in spite of the fact that there is no longer the necessity for them to stimulate the economy.  Under present conditions fixed-income markets, be they in treasuries or in bonds are not attractive because of these low rates.  Stock markets, while no longer at bargain levels, may be more so.  Companies exhibiting solid growth in earnings and increasing dividends should continue to attract longer term investors.

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