COMMENTARY ON PORTFOLIO PERFORMANCE – AUGUST 2022
August was a month of two halves. It started hopefully, with good U.S. labour market data, a slight decline in inflation and a sharp fall in oil prices. markets were buoyed on hopes that rate rises might not be so large. US GDP data showed the economy shrunk by 0.2% from the previous quarter, the second successive decline indicating the US economy is in technical recession. This gentle slowing down is what the Fed intended.
But Fed Chief Jerome Powell said more needs to be done and this led to an equity retreat. Stock prices started to fall again in the middle of the month while bond yields rose sharply. European bond market expected a more aggressive interest rate increase from the ECB this month to tame inflation.
Volatility continues as governments continue the push/pull battle between curtailing inflation and hurting growth. We contend that remaining committed to your long-term investment plan and remaining diversified to be the correct course of action.