Market Notebook

Global equities performed well during the last week while the bond complex generally consolidated in a range.

The Conference Board’s Leading Economic Index registered a substantial increase in July, suggesting the real economy is performing well.

The most significant potential risk to equities appears to be the Federal Reserve. The trimmed mean PCE, an indicator of inflation, was quite strong in June and July. It will be interesting to see where the August number comes in. Continued strength in the trimmed mean PCE could suggest an inclination by the Federal Reserve to taper bond purchases sooner rather than later. If and when market participants become convinced that the Federal Reserve will begin tapering bond purchases, equity and bond prices could move lower.

Overall, market participants appear to be in a “buy the dip” mood in equities until proven otherwise.

All the best in the week ahead.