Weekly Market Recap The US Federal Reserve held the target rate flat this week, but the Bank of Japan raised its inflation target. Japan's move was a further bid to encourage the Japanese economy to exit the low growth and deflationary periods that have dogged it in recent decades. Separately, the OECD (Organization for Economic Cooperation and Development) updated their growth projections, expecting 2016 global GDP growth of 2.9%. Most developed economies, including the US, are expected to grow in a 1% to 2% range in 2016 with the emerging markets of India and China expected to grow faster.
As the OECD forecasts demonstrate, many economists expect 2016 to see the global economy grow slightly and at a rate below its potential. However, performance of major asset classes and geographies has generally been positive so far this year. In addition, market volatility remains relatively subdued compared with certain historical norms. We don't know what the markets will do in the shorter term, but it's worth remembering that bouts of temporary volatility, such as what we saw around February of this year, can easily recur.
As a long-term investor it is important to neither get too complacent during the relatively better periods nor too anxious during the more volatile ones. We believe the key is not to focus on week-to-week or even month-to-month market movements, but instead to consider the longer term potential of a balanced portfolio as illustrated by history.
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