July stock markets rose significantly with the major indices averaging a gain of 6.8%. Bonds also had a good month, the composite index up 2.4% in July. Nearly all U.S. stock sectors rose, as did international stocks outside China. Stocks and bonds still average negative returns year-to-date and from a year ago.
The Federal Reserve raised interest rates another .75% as expected and stock prices rose in approval. We anticipate another rate hike when the Fed meets again in mid-September (every 6 weeks). If one more rate hike brings inflation mostly under control, the chances of serious recession from high interest rates can be averted. High interest rates raise borrowing costs (credit cards and loans) and favor savers. In the current economy, a U.S. recession remains at least 6-12 months away.