Investors look past COVID concerns
Markets continued to rally in July despite many countries experiencing a renewed wave of COVID-19, especially with a rise in Delta variant cases. Investors remained upbeat despite coronavirus concerns, looking past rising case counts and continuing to anticipate economic reopening, as hospitalizations have not followed the same trend relative to case counts as have been reported in previous waves. The focus remains on central banks and markets attempting to pre-empt monetary policy changes. Bonds gained in July as longer-term yields fell, even as inflation readings gained in June. U.S. Federal Reserve’s acknowledgement of economic progress hints that the central bank is moving closer toward tightening. However, when considering the Fed’s dual mandate of maximum employment and price stability, lagging employment recovery is expected to keep the federal funds rate low for now.