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Overview: Global equities were mixed last week in a quiet summer trade, with U.S. stocks up marginally following testimony from Federal Reserve Chairman Jerome Powell. The Fed chair described the U.S. economy “in a very good place,” and that many Fed members “have come to the view that a somewhat more accommodative monetary policy may be appropriate.” His comments indicate that the Fed would be willing to cut rates if events “continue to weigh on the economic outlook.” Minutes from the June Federal Open Market Committee (FOMC) meeting and Chairman Powell’s testimony point to a stronger case for rate cuts. However, a strong June employment report, and an inflation report that showed that core CPI rose 2.1% year-over-year (higher than expected), may give the Fed ammunition to cut rates slower than market expectations. Given the current 2-year Treasury yield of 1.83% and the funds rate of 2.50% (67 bp difference), the market has already priced in 2-3 more 25 bp rate cuts. Looking forward, investors will be keeping a close eye on future Fed actions compared to these market expectations.

This communication is for informational purposes only. It is not intended as investment advice or an offer or solicitation for the purchase or sale of any financial instrument.

Indices are unmanaged, represent past performance, do not incur fees or expenses, and cannot be invested into directly. Past performance is no guarantee of future results. 2642312