However, the June FOMC meeting is scheduled one week before the Brexit vote.
Based on recent economic and market data, we continue to believe US GDP will enjoy 2%-2.5% growth in 2016, driven by consumption, housing and improved government spending. Economic and market data have improved since the Fed’s January meeting:
• First quarter 2016 GDP growth is estimated at 1.9% by the Atlanta Fed, a significant improvement from the fourth quarter 1% level.
• Employment continues to make gains, with the higher than expected 242,000 non-farm payroll achieved in the latest February report, and with initial unemployment claims reaching a five-month low and the four-week moving average falling to 267,500.
• Manufacturing appears to be finally bottoming, as indicated by the latest Industrial Production, where manufacturing did better than the headline data, and ISM Manufacturing reports, which fell to 48.0 in December, but rebounded to 49.5 by the end of February.
• The global outlook has stabilized, with a bottoming and recovery in oil prices, as well as a bottoming in other commodities. China has taken steps through monetary and fiscal policy to ease the transition of its economy from an investment to consumption driven model, and to affect an orderly and measured depreciation of the Yuan.
• Financial conditions have eased, as reflected in rallying equity markets and lower corporate spreads. This improvement has been driven by improving US data and the bottoming of commodities prices, as well as by monetary policy easing among global central banks, most notably the ECB, the BOJ, and the Bank of China. In particular, the ECBs actions supporting the banking sector, and the extension of its asset purchase program to include corporate bonds resulted in dramatic spread compression of corporate debt, particularly in the banking sector.