Risk finally received its comeuppance in July. Last month witnessed the broadest round of negative returns since January among the major asset classes. Stocks in developed markets (including the US) took it on the chin, although the modest gain in emerging-markets equities in July delivered a notable exception. Indeed, the MSCI EM Index posted a decent 1.9% rise last month while US stocks slipped 2.0% (Russell 3000)—the first negative monthly total return for American shares overall since January. Foreign stocks in developed markets (MSCI EAFE) had a setback as well, sliding 2.0% in July.
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The US economy minted fewer jobs than expected in July, although the year-over-year change in private-sector payrolls inched higher, reaching an eight-month peak, the Labor Department reports. Meanwhile, personal income and spending in June rose in line with expectations, according to this morning’s update from the US Bureau of Economic Analysis. Although the talking heads are playing up the monthly comparisons and drawing any number of dramatic conclusions, the real story is that nothing much has changed via today’s data points in terms of the trend for the art/science of monitoring business cycle risk.
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