August Monthly Market Review

An excerpt from our August Monthly Market Review: 

The omni-rally continued in August. U.S. equities, bitcoin, and gold all closed the month near record highs while credit spreads narrowed to quarter century lows. Non-U.S. equity markets also enjoyed strong gains. Equity and bond market volatility fell. There remains scope for further froth. The Fed will almost certainly refresh the punch bowl in September, and more fiscal stimulus is on the way. Looser financial regulations are also on the horizon, increasing the scope for near-term reward and long-term risk. Despite a pull-back in August, AI stocks continue to dominate all aspects of the U.S. equity market this year– its narrative, earnings, price gains, and capitalization. AI capital expenditure is also having an outsized impact on GDP, representing an estimated 0.5 percentage points of economic growth. Whether these expenditures are rewarded commensurately by productivity gains and profits remains an open question. With the Fed expected to loosen policy, the yield curve steepened as short rates fell, and long-bond yields rose in anticipation of higher inflation. The U.S. dollar depreciated. Oil prices fell. Click here to download our latest Monthly Market Review.

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