Market Recap: August 2022

September 02, 2022
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Market commentary

  • The revised estimate of second quarter GDP showed a modest contraction of (0.6%), marking consecutive negative GDP prints and heightening expectations that the United States has or will fall into a recession.
  • Inflation remains high but decelerated in July.
  • Jobs remain plentiful for now with the Unemployment Rate falling to 3.5%.
  • Consumer Confidence increased for the month after three straight declines, a potential positive for consumer spending outlook. 

 

Select economic and market data

Statistic (monthly unless noted)

Current

Previous

U.S. GDP (quarterly) -0.6% -1.6%
Consumer Confidence 103.2 95.3
Consumer Price Index Y/Y 8.5% 9.1%
Retail Sales 0.0% 0.8%
Unemployment Rate 3.5% 3.6%
2-Year Treasury Yield 3.50% 2.89%
10-Year Treasury Yield 3.20% 2.65%

 

Equities

  • Stocks fell in August with the S&P 500 losing over 4% for the month, dashing hopes of a sustained rally for the time being.
  • Losses were broad-based for the month, with only Emerging Markets stocks posting a gain.
  • Year-to-date, 2022 has seen all major stock indices post double-digit declines.
Equities Indices August 2022

 

Fixed income

  • Treasury rates moved sharply higher as the Fed appears poised to maintain tighter monetary policy.
  • The yield curve remains inverted, which is often associated with recessionary periods.
  • Aside from T-bills, bonds lost value in August and are sharply lower year-to-date.
Fixed Income Indices August 2022

 

Strategic outlook

  • Neutrally positioned on equities while slightly favoring international over domestic for long-term returns.
  • Maintaining shorter-duration fixed income structure as the rising interest rate environment is likely to persist.
  • Finding value in select domestic equities while trimming outsized “growth” exposure.
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Investment products: Not FDIC Insured — No Bank Guarantee — May Lose Value.

 

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