The Federal Reserve, during the meeting in late July, held rates unchanged for a fifth consecutive meeting which was very much telegraphed ahead of the meeting. The louder narrative after the meeting surrounded the two dissents who favored an immediate cut. Fed chair Jerome Powell and the rest of the Fed members continue to gauge how tariffs are impacting the overall economy and estimating their probability of influencing inflation in the coming weeks and months ahead of the next meeting in September. According to interest rates futures markets, it is approximately a coin flip currently on whether interest rates will be cut at the next meeting.
The Commerce Department reported that US GDP rose 3.0% during the second quarter compared to a 0.5% contraction in the first quarter. It is comforting to see that the economy continues to push ahead, primarily driven by strong consumer spending, but as we know capital markets do not look in the rear-view mirror and focus will quickly shift to Q2 earnings and revised outlooks going forward. While there have now been more trade deals announced, we are keenly watching the commentary from the largest companies since there has been a slowdown in business spending and investment as a result of the recent uncertainty. As the dust from the disruption of first six months of the year begins to settle, we will continue to evaluate our preference for large-cap equities over small and mid-cap stocks and favoring shorter duration credit investments than longer term treasury bonds.
Information in this commentary is gleaned from third-party sources, and while believed to be reliable, is not independently verified. This content is not intended to be tax, legal, investment, or fiduciary advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The strategies and/or investments discussed in this material may not be suitable for all investors. Bernardo Wealth Planning recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial advisor. Past performance does not guarantee future results.