Market Pulse – July 2023

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We are excited to share insights from the Wealth Management Investment Strategy Group (ISG).

If you’re wondering where the US economy may be heading, here is a summary of things to know from ISG.

Economic data: Upside surprises in June

  • The economy continued to grow. First quarter GDP was revised up to 2% from 1.3% previously on stronger consumer spending and higher net exports. And consensus expectations of second quarter GDP increased to 1.3% from 0.5% at the end of May.
  • The labor market remained strong. The June non-farm payroll report beat expectations for the 14th consecutive month.
  • The housing market was remarkably robust, despite higher mortgage rates.

US equities performed well

June was a strong month for equities, with the S&P 500 returning 6.6%, capping a better-than-expected first half of the year.

Inflation slowed, but remained elevated

While inflation remains elevated, the latest CPI (Consumer Price Index) report (published 12 July) showed a 28-month low in core inflation in June. ISG anticipates a further moderation in price pressures in coming months, thanks to improved supply chains and cooling housing inflation. But disinflation will continue to happen gradually, in their view.

The Fed’s next moves

ISG expects the Fed to deliver one more 0.25% rate hike at the July meeting. Beyond that, the outlook is more uncertain. Although inflation will cool slowly, they think it may have declined far enough by the September Fed meeting for rate hikes to remain on hold for the rest of the year.

What’s on the radar screen this month? Inflation data and the Fed meeting will continue to be the focus.

This memo and the views within are based on the Wealth Management Investment Strategy Group’s July Macro Monitor publication – a publication focused on the team’s global macroeconomic views.

The Investment Strategy Group (“ISG”), part of the Asset & Wealth Management business (“AWM”) of GS., focuses on asset allocation strategy formation and market analysis for GS Wealth Management. Any information that references ISG, including their model portfolios, represents the views of ISG, is not financial research and is not a product of GS Global Investment Research and may vary significantly from views expressed by individual portfolio management teams within AWM, or other groups at GS. 

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