Economic Update: Treasury Considerations for the Remainder of 2026

Speaker A: Foreign M. Welcome to the Treasury Update Podcast presented by Strategic Treasurer, your source

Speaker B: for interesting treasury news, analysis and insights

Speaker A: in your car, at the gym, or wherever you decide to tune in.

Speaker B: Welcome everyone, to today's episode of the Treasury Update podcast. This episode is called Economic Treasury Considerations for the remainder of 2026. I'm Craig Jeffrey, your host today, Managing, uh, partner, strategic Treasurer. And I'm, um, interviewing Paul Galloway, one of our senior advisors. And so glad to have you back on the podcast, Paul.

Speaker A: Yeah, thanks for having me, Craig. Always a good time.

Speaker B: The first question for the Economic update is what impact is there with a new Fed chair related to monetary policy?

Speaker A: I think that's a good question because I think a lot of people, um, understand that, uh, President Trump wants to have some influence over the Fed, but I don't think that, uh, getting a new Fed chair in is going to change the way the Fed operates. They are independent for a reason, but there's definitely opinions in terms of how a Fed chair should behave. Right. And what they should do and shouldn't do. So I don't think that the new Fed chair is going to be overly influenced by any politician within the government itself. There's a couple factors. I think they're going to hold true or traditional in a way, except that, uh, this Fed chair doesn't believe in providing more of a forecast view, which the Fed still has the dot plot. There is still some kind of guidance in there, but he's not as transparent, perhaps as some folks would want. But, you know, he's going to look, he's going to look at interest rates, he's going to keep focused on that in terms of, you know, how is the labor market growing? Is it growing in a positive way? What's going on with inflation? You know, the Fed's going to continue to look at inflation closely. I think those two components, labor market and inflation, kind of go hand in hand with how does the consumer behave. You hear about this concept of a K shaped consumer where you have current times when the markets are doing really well, your high income earners are spending without much care. Uh, but there can also be high inflation and it's putting pressure on your lower income earners and they're having to balance their budgets a lot tighter and they're, uh, not perhaps spending as freely. And so we see some of that out there. And I think the Fed is going to continue to focus on these things that matter. Wages, labor, inflation. They're going to control those interest rates. We did see that there was, uh, three Fed Board members that dissented on the uh, last Fed meeting. So I think there is some kind of sense out there that, all right, inflation's been there for quite a while. We know we've got uh, this conflict going on in the Middle east right now. It's backing up some oil, uh, we've increased production, but inflation's still persistent. So it's not just purely energy. There are some other inflationary aspects that occurred from a global standpoint. So I think um, you know, this new Fed chair is going to behave kind of like what the other ones have, but maybe with uh, a little bit less on the forecasting side of things. And this is something Craig, that I, I've been thinking about for a long time. Fed is historically always looking at backward looking data and information. My hope is they start thinking a little bit more forward. Doesn't mean they have to communicate it kind of this idea of looking forward and um, what are some of those scenarios? What does that mean in terms of decision making that we as a Federal Reserve Board have to take into account? These are important decisions. What they say and the actions are taken have a direct impact on our economy. So you know, new Fed chair, it's an important thing and it takes a little while for the market to pick up on what they're saying, the cues, the things that they say without saying something. You know what I mean? It's uh, it's always kind of the tough part. When the uh, new Fed chair.

Speaker B: You spoke about the new Fed chair interest rates K shaped consumer the impact and labor market. Maybe you could talk about how treasury groups would or should respond to changes in US Growth rates, inflation, energy. What's necessary to position yourself strongly as a corporate treasurer or treasury team to manage cash, manage liquidity or risk in light of those three uh, changes.

Speaker A: Yeah. So um, certainly I think all these things are on the radar screen for us Expansion that is perhaps moderating some. We still have decent growth. Inflation is just a little persistent. I think treasury teams need to be perhaps a little defensive in nature. You know, act more strategically from a cash management standpoint, whether it's trying to ladder their short term portfolio, you know, monitor the interest rates and um, perhaps use some more automated sweeps, CBAs or concentration accounts to centralize pool cash. I think managing uh, bank relationships is super important. Making sure you have the right banking partners in place that your credit facility, your revolver, your line of credit, whatever it is that you have in place, perhaps contingent capital or contingent liquidity, everything's up to snuff and that um, you have those things in place so that when things aren't as smooth as a normal, or you have tools in your toolbox, you can go to and pull out when and where needed. Managing working capital cycle. If you're an organization that has, uh, working capital, some organizations like insurance companies really don't have working capital, but manufacturers, they have working capital. They have to manage, manage those supply chain relationships. Utilizing, uh, financing tools to help you manage those relationships and keep things moving along. From an inflation standpoint, I think there's a need for organizations to prioritize liquidity and cash visibility, ensuring that, uh, you have the ability to understand what your existing position is, the accounts that you have in place and where your levers are and optimize that across your organization. Leverage, uh, technology to help you with automation. From an energy standpoint, uh, there are organizations where I think energy becomes a lot more important to them. Some require a lot of energy to perhaps manufacture goods. And um, you know, that is something where, uh, hedging, uh, using uh, relationships to manage the volatility of perhaps commodities or spikes in energy prices, which over the last, uh, 12 months we've seen some volatility in there on oil and trying to manage that. If oil is a big component of, either it's an input cost or it's something that you utilize to uh, manufacture or build something. Being able to manage that component, understand what's going on in the markets, is really important to a Treasury team.

Speaker B: So as you were talking about those things, I was trying to figure out where you were on the, uh, pessimistic, optimistic scale for where things are now. Not that it's a key part of that, but if you said you're exactly neutral, this is the stable time, that'd be 50. If you're more pessimistic, maybe it's 40, maybe you're more optimistic, it's 60. Where would you place yourself?

Speaker A: Yeah, so we had, um, job numbers that came out, wages that were down from what we expected they were going to be recently. But it still seems like the labor market's still relatively strong. I think there's still upside in the US because we have a lot of competing things going on out there in particular that are driving greater efficiencies and certainly competition from a global standpoint with artificial intelligence, the need for data centers, we are seeing also uptick from standpoint of uh, protecting the country. So this would be, there's munitions or technology for troops and having a strong military. We're seeing some of these things that are Filtering through, uh, the U.S. and quite frankly, with the, uh, post Covid, we've seen the kind of this transition to have more of a diversified footprint in terms of supply chain. So we're not overly reliant on one country for everything. We're seeing rare earth minerals becoming more and more important. All these factors I, uh, believe are creating jobs or going to create jobs. And so I think, uh, you know, I'm not, I'm more optimistic than pessimistic.

Speaker B: More 55 or 52 or what?

Speaker A: Yeah, probably more. 55, 65 range.

Speaker B: Well, as we look at some of the things that are going around the world, the conflicts, as you referred to them, some wars, uh, tariffs still continue to some extent. They're certainly not talked about as much. Sanctions exist. There's a few other employment things that you had mentioned. What do treasury teams need to be thinking about as they look to manage, uh, their liquidity, minimize their risks? What's your guidance there?

Speaker A: Yeah, I think there's definitely a need for treasury teams that are connected where there's supply chain or location where they do business. I think they need to keep up the speed on the geopolitical and economic environments first, one being where conflicts are happening. If, you know you're doing business in the Middle east right now, it's definitely a challenging time, especially if you're relying on oil that comes out of, uh, the Middle East. We have seen that the US has picked up production to help fill some of the gap. But, uh, you know, these conflicts create disruptions. And I think organizations that are susceptible to perhaps risks in those particular areas need to think about those strategically. If A happens, I do this. If B happens, I. I, uh, do this. So it's more of a proactive approach to understanding the sensitivity to different variables and scenarios where something could, from a conflict standpoint, impact your organization, your ability to access capital to get inputs for manufacturing or developing something and, you know, make sure that from credit, um, standpoint that you have the right relationships in place and that your credit terms are tight. You mentioned tariffs. I didn't specifically call them out earlier, but yeah, tariffs, they haven't gone away. They're still there. So when that comes into play, the consumers. As a consumer, I'm kind of paying attention to what's going on. Tariffs, I can see it in the price of things that I buy and consume. Uh, you know, that often can get passed on to the consumer, gets passed on to manufacturer, gets passed on to the consumer. So what does that mean for an organization that's trying to produce competitive, uh, products and services. I think it's one you can look and see if you have TRAP cash. If you're a global organization with TRAP cash, find ways you can tap into that cash so that you can mobilize it and utilize it. It's a source of liquidity for you. Manage those, uh, supply chain relationships, your working capital management, cash conversion cycle come into play. Being able to have that be efficient. Obviously during times of stress, you see that there's lagging on receivables. At the same time you're trying to push out your payables. Using tools to help you manage that through supply chain financing or other tools I think can be important to treasury teams that are impacted by those. And the last piece that I wanted to talk about quickly was on sanctions. So it's kind of interesting. We see sanctions come out from countries, on other countries, you know, to basically hurt them or prevent them from doing something that you don't want them to do that can be detrimental to, you know, the global footprint writ large. So it's kind of interesting. We had put sanctions on China for drones and bringing drones into the U.S. they turned around, put sanctions on us for, you know, several companies for drones as well. So it's kind of like, well, you did that. I'm going to go do that. It's uh, sometimes, you know, whether it's tariffs or sanctions, sometimes they're uh, a little bit of window dressing in a way, but sometimes they can have real impact on organization. So I think treasurer teams need to understand, you know, what exactly is happening, what does that mean to their organization and do I have the right tools in place to effectively manage my cash, not only in the near term, but in the shorter to longer term period as, uh, these things are happening out there.

Speaker B: You know, she talked about some of these different items. And the understanding is that treasury teams have to have their feelers out, their antennas up, they have to be listening, talking about what's going on, how do you stay current and how do you recommend that people stay current on US Global, wherever you're located, your home country, and then global economic, uh, factors or conditions. What's your recommendation for staying current up to date?

Speaker A: Yeah, I think that's a great question. I mean, there's certainly publications like, you know, Wall Street Journal, use of a platform, finance platform like Bloomberg, or other financial tools out there where you can subscribe and get data and information. These are good tools, you know, and there are other ways to get information, data, one that can be potentially overlooked by Organizations is their banking partners. They can lean on their banking partners to provide them with economic data, forecasts, kind of positioning. They'll do this, um, you know, on a regular basis for you. So just make sure you keep those relationships fresh. Um, keep in front of them asking questions. If you're wondering about something, just pick up the phone and call your banking partner. They'll talk to you and they find out your interest about something. They'll give you access to information. This is something that I utilize quite a bit, uh, in, throughout my career. The banking partners I found to be pretty important. Another area that treasury teams can leverage is around peers. Talk to your peers, talk to other people. Uh, you know, whether you're a manufacturer, insurance company or uh, whatever it is, whatever organization you work for, talk to peers, see what they're doing, see what they're noticing. Uh, I think you'll find there's things that you'll have in common and that could be a good sounding board for figuring out, you know, really what's going on. Central banks, Central banks provide uh, information. Like here in the US Here people talk about Fed space book. People still look at that, they still pick up those kinds of documents that are produced out there and they read them. So there's lots of opportunity I feel out there to get, whether it's micro or macroeconomic, uh, monetary or fiscal policy, uh, drivers, the data is out there and there's a lot, there's a lot of opportunity to get that. Where I think over the longer term, where I think it's going to be more beneficial for treasury teams is as artificial intelligence becomes better agents for treasury teams to provide information and perhaps analytics. No, there's still work to be done there and you can use it today. Uh, you still need to make sure that you uh, understand the parameters, how data is being shared, uh, what the source of the information is. You want to make sure you have the source of truth. Um, you can use AI to build models for projections, machine learning. These tools are being utilized today by organizations I think is going to be come more and more integrated. I think the ability to get data and information at the fingers fingertips I think is going to become easier, easier. But you have to use the old process of trust but verify, you know, making sure that once you've utilized something to help you do that, test it out, uh, make sure it's good to go. Once you feel comfortable with it, you may be able to rely on it, um, going forward. You know, kind of take those small steps, uh, and utilize those technology tools. To provide or gather data and information publications, your banking partners, central banks. These are all good data sources for treasury teams to get information and, uh, help them think from a strategic standpoint what they should be doing or what they might want to be considering.

Speaker B: Yeah, excellent, Paul. Thanks so much, uh, and for everybody for joining us for this economic update, treasury considerations for the remainder of 2026. So, Paul, thanks, uh, again for your comments.

Speaker A: Yeah, thanks, Greg. Appreciate the time. Again, You've reached the end of another episode of the Treasury Update podcast. Be sure to follow Strategic Treasurer on LinkedIn. Just search for Strategic Treasurer. This podcast is provided for informational purposes only and and statements made by Strategic Treasurer LLC on this podcast are not intended as legal, business consulting or tax advice. For more information, Visit and bookmark StrategicTreasurer.com.