Stock markets bounced back last week, posting the first positive weekly return in a month. Despite dropping on Friday (led lower by social media firms), the S&P 500 index, a proxy for large-cap US stocks, advanced 2.6 percent while the MSCI ACWI, a proxy for large-cap global stocks, jumped 3.2 percent for the week.
All eyes will be on the US Federal Reserve (Fed) this week, as they are scheduled to meet amidst a backdrop of contradictory economic data. Inflation, as measured by the US Consumer Price Index, remains at its highest point in more than four decades, suggesting that the Fed should be aggressive in raising rates in an effort to cool price.However, other data points may be indicating that the economy is already starting to slow down, suggesting the Fed may want to be less aggressive so as not to tip the economy into recession.
For example, the S&P Global flash composite purchasing managers output index just slid into contraction territory for the first time since the pandemic (see below).Investors will be watching the Fed closely, not just to find out what happens with interest rates this week, but also to pick apart the Fed’s messaging in an effort to gauge their vision for the remainder of the year.
Prices & Interest Rates
Crude Oil (US WTI)
2 Year Treasury
10 Year Treasury
30 Year Treasury
Source: Morningstar, YCharts, and US Treasury as of July 23, 2022
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