Investors bought the dip in July on hopes the Federal Reserve is about to change course and relax policy before inflation has even peaked.

Here are 3 things you need to know:

1. July was the best month for the S&P 500 since November 2020, when the first vaccine trial results were reported.
2. High yield corporate bonds returned +5.9% in July (total return), the strongest monthly performance since 2009.
3. Gross Domestic Product (GDP) fell at a 0.9% annualized rate in the 2^nd quarter, marking the second consecutive quarter of declining economic output.

Sources:

1. Sources: J.P. Morgan Asset Management – Economic Update; Bureau of Economic Analysis (www.bea.gov); Bureau of Labor Statistics (www.bls.gov); Federal Open Market Committee (www.federalreserve.gov)
2. Indices:
   • The Barclays Aggregate Bond Index is a broad-based index used as a proxy for the U.S. bond market. Total return quoted.
   • The S&P 500 is designed to be a leading indicator of U.S. equities and is commonly used as a proxy for the U.S. stock market. Price return quoted.
   • The MSCI ACWI ex-US Index captures large and mid-cap representation across 22 of 23 developed market countries (excluding the U.S.) and 27 emerging market countries.  The index covers approximately 85% of the global equity opportunity set outside the U.S. Price return quoted.
   • The MSCI Emerging Markets Index captures large and mid-cap segments in 26 emerging markets. Price return quoted (USD).

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