July 2023 Market Update

Financial markets were hot in July, starting the second half of the year off with a bang. There was a clear appetite for riskier segments of the market as equities generally outperformed fixed income. Even in the face of negative year-over-year earnings growth so far for the second quarter, favorable economic data helped bolster returns.

Key Observations

• Markets posted favorable returns in July as investors found renewed optimism in economic data being reported, even in the face of year-over-year earnings declines.

• The Federal Reserve raised rates in July, now targeting 5.25-5.5% for the Fed funds rate. Markets have all but priced in a pause at this level for the remainder of the year.

• Private credit has garnered attention. The asset class has the potential to provide portfolio diversification and yield above traditional fixed income, but investors must consider the added cost, reduced liquidity and increased credit risk when contemplating an allocation.