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Statements and opinions expressed about the next 6-12 months were developed based on our independent research with information obtained from Bloomberg Finance L.P. and FactSet. The views expressed within this material constitute the perspective and judgment of PFM Asset Management at the time of distribution (3/31/2026) and are subject to change. Information is obtained from sources generally believed to be reliable and available to the public; however, PFM Asset Management cannot guarantee its accuracy, completeness, or suitability.Monetary Policy (Global):• The Fed held rates steady in Q1 amid persistentinflation pressures and limited net job creation.• Policymakers acknowledged the path forward iscomplicated, with geopolitical uncertainty addingadditional strain to the Fed’s dual mandate.• The “dot plot” projects 25 bps of rate cuts in both2026 and 2027; however, this is predicated oninflation progress.• Global central banks remained on pause in Q1 butenergy inflation pressures may necessitate hikes.Economic Growth (Global):• Stable consumer and business spending supportgrowth, offsetting the weakness seen from the U.S.government shutdown in Q4 GDP.• Fiscal support and AI investment should aid growth;however, a prolonged conflict in Iran may weigh onconsumer discretionary spending.• Risks to global growth prospects have increasedamid the escalating conflict due to higher energyprices, supply-chain disruptions, and increaseduncertainty.Inflation (U.S.): • The inflation outlook depends on the duration of theMiddle East conflict and the degree to which higherenergy and commodity costs raise core goods andservices prices.• Inflation remains sticky with limited progress on coreservices and continuing pressure from tariffspassthroughs.• Near-term inflation expectations have increased dueto the higher energy prices while long-runexpectations remain anchored.Financial Conditions (U.S.):• Corporate fundamentals and underlying demandremain strong. Spread widening has improvedvaluations, though the sector is still rich from ahistoric perspective.• The conflict in the Middle East has tightened financialconditions. The duration of the conflict and its impacton the economy will be a key driver of corporatefundamentals.• Geopolitical conflict, higher oil prices, and theevolution of the economy are key risks. At this timewe view volatility in private credit as contained andnot a systemic risk.Consumer Spending (U.S.): • Modest job growth and inflationary pressurescontinue to weigh on consumer sentiment. Higherenergy and food prices will likely drive consumersentiment lower.• Wage growth continues to exceed inflation, but thisgap has narrowed. Energy shocks may compressreal incomes and reduce discretionary spending.• Lower-income cohorts remained more exposed tohigher energy prices as a larger share of householdbudgets are allocated to essentials.• Higher-income cohorts benefit from strong equitymarkets and home price appreciation in recent years.Labor Markets (U.S.):• Labor market conditions continued to cool with netnew job creation close to zero.• The unemployment rate remained unchanged aslower job creation was offset by a reduction in thepace of labor force growth.• The Fed has framed the combination of limited jobgrowth and a stable unemployment rate as anuncomfortable balance.• Initial jobless claims and layoff rates remain low,consistent with a continued “low-hire/low-fire”environment.Stance Unfavorable to Risk Assets Stance Favorable to Risk Assets Current outlook Outlook one quarter agoNegativeSlightly NegativeNeutralSlightly PositivePositiveFactors to Consider for 6-12 Months City of San LeandroFor the Quarter Ended March 31, 2026Market UpdatePFM Asset Management | pfmam.com14Resolution No. 2026-064Page 14 of 60