Market Perspectives — Q1 2016

Economy

• Our outlook for the US economy is for stable growth and the risk of recession remains low
• Our outlook for GDP growth forecast has lessened from 2.5% to just above 2%
• Inflation is likely to remain below 2% due to lower energy prices, a strong dollar, and wage growth which remains moderately low
• The labor markets show signs of improving even as wage growth remains muted
• Probability of the next Fed rate increase occurring before June is low
• Concerns over global terrorism and China’s economic slowdown will provide headwinds to global economic growth

Fixed Income

• Fixed income yields are likely to remain low by historical standards, in part due to divergence in global monetary policy
• Uncertainly around the timing of Fed rate hikes may cause near-term volatility in short-term rates but should have less impact on intermediate-term and long-term interest rates and thus our clients’ bond portfolios
• Corporate bonds and municipal bond after-tax yields remain attractive for the taxable investor due to compressed Treasury yields
• High Yield spreads are nearly double the long-term averages which may provide opportunities for investors with a tolerance for higher volatility

Equity

• Value style performance is showing signs of improving relative to the growth style
• Political cycle and global demand changes will be key drivers to market volatility
• In the near term, equity returns likely will be driven more by earnings growth than by growth in valuations
• Our equity outlooks calls for below average, but positive returns for US stocks over next 12 to 18 months

Foreign Equity

• We believe fair to attractive valuations exist in many international markets
• Accommodative international monetary policies may provide tailwind to Developed Equity markets
• Although the first quarter saw improvements in commodities, Emerging Markets may still face headwinds due to slower global growth

Alternatives

• Absolute Return strategies should continue to help provide diversification benefits to client portfolios
• Although our underlying inflation expectations are moderately low, Real Assets could benefit from low valuations such as we experienced in the first quarter

The INTRUST Market Perspectives are the consensus of the INTRUST Bank, N.A. ("INTRUST") Wealth Investment Strategy team and are based on third party sources believed to be reliable. INTRUST has relied upon and assumed, without independent verification, the accuracy and completeness of this third party information.

INTRUST makes no warranties with regard to the information or results obtained by its use and disclaims any and all liability arising out of the use of, or reliance on the information.

The information presented has been prepared for informational purposes only. It should not be relied upon as a recommendation to buy or sell securities or to participate in any investment strategy. The Forward–Looking Perspectives are not intended to, and should not, form a primary basis for any investment decisions. This information should not be construed as investment, legal, tax or accounting advice. Past performance is no guarantee of future results.