Market Perspectives — Q2 2016

Economy

• The recent UK referendum (Brexit) has started a lengthy, political process for the UK to negotiate its withdrawal from the EU. The direct economic effect will likely be most pronounced for the UK; global economies will be less impacted since the UK represents only 4% of the world’s GDP
• Presidential politics will continue to create headline noise but history would indicate that which party wins the presidential election has little impact on overall market performance
• Our outlook for the US economy is for stable growth and the risk of recession remains modestly low
• Our outlook for GDP growth remains around 2%
• Inflation is likely to remain below 2%; contributing factors include lower energy prices, a strong dollar, and wage growth that remains moderately low
• Labor markets continue to show mixed signs of improvement
• Probability of the next Fed rate increase occurring before the election is low

Fixed Income

• Further gains this year in bonds may be limited due to the recent run-up in performance
• An environment of volatility and historically low rates is likely to continue
• Yields likely to remain low by historical standards, in part due to accommodative global monetary policies

Equity

• US election cycle and political global uncertainties may be key drivers to market volatility but long-term performance should be more affected by corporate earnings
• Our outlook calls for below average, but positive returns for US stocks over next 12 to 18 months
• We believe attractive to fair valuations exist in many international markets and accommodative monetary policies may provide tailwind to Developed Equity markets
• Emerging Markets will require improvement in global economies for continued growth

Alternatives

• Real Assets have posted strong returns in the 1st half of this year but further advances may be muted due to low inflation expectations
• Absolute Return strategies held up well during the Brexit market selloff and should continue to help protect against market volatility and augment below-average fixed income return expectations

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.