Oil prices to converge to long-run equilibrium despite short-term volatility

  • High growth and inflation will continue in 2018 & 2019

  • We now anticipate that the Fed will raise rates three times in 2019; for 2018, we maintain our baseline scenario of hikes in Sept. & Dec.

  • Despite elevated volatility in the employment surveys we maintain our outlook for ongoing tightening in the labor market; unemployment rate to reach 3.7%

  • With the additional tailwinds from the expansionary fiscal policy, we expect core PCE to rise above 2%

  • Economic fundamental continue to support gradual rise in 10-year Treasury yields

  • The yield curve slope between the 10-year and 2-year Treasuries will flatten further, but remain positive

  • Oil prices to converge to long-run equilibrium despite short-term volatility

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