The Weekly Wire: Three Dates in July
The Weekly Wire highlights three significant July dates for investors: July 4th, celebrating U.S. Independence Day; July 13th, when the Bureau of Labor Statistics will release June's Consumer Price Index expected to show an 8.7% increase influencing inflation outlook; and July 27th, when the Federal Reserve is anticipated to raise interest rates by 75 basis points and provide critical guidance on future monetary policy amid ongoing inflation concerns.
As investors, we strive to put near-term economic and market headlines and volatility – to the upside and downside – in perspective, keeping our focus on the long-term and our long-term investment objectives, aided in that effort by a thoughtfully constructed and carefully managed multi-asset class portfolio. But, as we say goodbye to the second quarter of 2022 and hello to the month of July, our focus turns to three very important dates during the month, named in honor of the Roman Emperor Julius Caesar.
The first is one date that matters every year this time of year and that is July 4th, the date we celebrate our country’s Declaration of Independence from the British Empire and the beginning of what has become one of the world’s longest-lived democracies. And we hope you all had a wonderful 4th of July holiday weekend.
The other two dates this month that we think matter, at least to investors, are July 13th—when the Bureau of Labor Statistics releases the Consumer Price Index for the month of June, and July 27th—when the US Federal Reserve concludes its July meeting. As it concerns the former, Wall Street is expecting the June CPI to have risen month-to-month by 8.7% (you will recall that the May CPI – which was released on June 10th – rose a greater than expected 8.6%, causing the Fed to raise the Fed Funds Rate by 75 bps at its June meeting and reinforcing an inflation dynamic that has weighed heavily on investor sentiment and risk assets).
As it concerns the latter, Wall Street is expecting the Fed to hike interest rates by 75 basis points at its upcoming meeting, bringing the Fed Funds Rate to a range of 2.25% to 2.50%. What will likely be more important than the July move in interest rates is how the Fed is thinking about and communicating around the path for monetary policy through year-end. Ideally, the June CPI number will come in cooler than expected, providing support to the peak inflation narrative and room for the Fed to move away from a 75 bps hike in the Fed Funds Rate at its September meeting.