CIO Monthly Observations - July 2023

Chris Zaccarelli |

Markets in Review

Markets rallied back strongly in June with the S&P 500 gaining 6.5% during the month, improving its year-to- date performance to 15.9%. The MSCI All Country World index also gained, up 5.6% for the month and increased its year-to-date return to 12.8%. However, the Bloomberg BarCap U.S. Aggregate Bond index fell, losing -0.4% during June and its year-to-date return is now down to 2.1%.

Markets cheered an interest rate pause from the Fed and are looking ahead to when they are done raising interest rates. Fed Chair Powell indicated that two more rate hikes may be necessary this year, but they held interest rates steady at their June meeting, which was the first pause after they had raised rates at 10 consecutive meetings. Meanwhile, a rebellion in Russia by their para-military force, the Wagner Group, shocked the world, but it was over almost as quickly as it began.

Monthly Highlights


Russia’s President Putin is trying to reassert control after a revolt Inflation continues to fall and is at its lowest level in two years

Fed Chair Powell is still talking tough on inflation after leaving rates unchanged in June

News in Review

Below are some stories that caught our eye this past month. To learn more, follow the links to the full article.

Russia's Putin Battles to Regain Control After Short-lived Revolt

The Wagner Group, a paramilitary organization funded by Russia’s President Putin, staged a mini rebellion on June 24th, and formed an armed convoy that was headed toward Moscow. Russia’s ally, Alexander Lukashenko, helped to resolve the crisis by agreeing to take in Yevgeny Prigozhin, the head of the Wagner Group, where he will effectively reside in exile in Belarus. Not much is known about what caused the rebellion and what it will mean for Putin’s grip on power, but it was a surprising turn of events, especially as the Russian war in Ukraine is well into its second year.

Inflation Drops Again in May

The Consumer Price Index (CPI) dropped down to 4.0% in May, which was a large drop from the April reading of 4.9% and represents the slowest annual pace in over 2 years. It’s also the 11th consecutive month that inflation has slowed, which is welcome news for the Federal Reserve, which has been aggressively fighting inflation for the past year and a half.

Powell Indicates at Least Two More Rate Hikes Ahead After Pause

Despite the sharp slowing in inflation, Federal Reserve Char Powell said that two more rate hikes may be necessary this year in order to bring inflation back down to their 2% target. However, the Fed paused their interest rate hikes at the June meeting, keeping rates unchanged for the first time in 11 meetings. In addition, some economists believe that he is talking tough, but because “inflation will likely be lower…by year-end, ultimately the Fed will hike less than what [they] have indicated.”

SteInside the World's Only Nuclear-Powered Passenger Ship - Built in 1959

The world’s only nuclear-powered cruise ship, the NS Savannah, was built in the United States in 1959 and was operational from 1962 to 1965, when it travelled to 45 foreign ports in 26 countries. It was designed to carry just 60 passengers, but it was able to accommodate 500-700 people for meals, because so many visitors would board the ship to see it when it was in port. It used low-enriched uranium as its fuel source, could cruise at 20 knots, and the only time its reactor was shut down was in 1964, when the ship passed through a hurricane.

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S&P 500 INDEX: The Standard & Poor's 500 Index is an unmanaged, capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
NASDAQ 100 INDEX: The Nasdaq 100 Index is an unmanaged, capitalization-weighted index of the largest 100 non- financial stocks traded on the Nasdaq market. Unlike the S&P 500 it does not represent all major industries and may be more volatile than more broadly constructed indices.
MSCI ACWI INDEX: The MSCI ACWI captures large- and mid-cap representation across 23 developed markets (DM) and 24 emerging markets (EM) countries. With 2,495 constituents, the index covers approximately 85% of the global investable equity opportunity set.
Bloomberg U.S. Aggregate Bond Index: The Bloomberg U.S. Aggregate Bond Index is a broad-based index of the U.S. investment-grade, fixed-rate bond market, including both government-related and corporate securities and mortgage- backed and asset-backed securities.
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