An Aggressive Tone in August

Monthly Market Snapshot: August 31, 2022

Highlights

The global equity market stumbled in August as Fed Chair Powell’s Jackson Hole speech signaled to investors that it is too early for central banks to dial back on aggressive rate hikes. Combined with rising concerns about an energy crisis in Europe as Russian supplies are curtailed, the MSCI AC World Index, a broad measure of global stocks, dropped 3.9%. European stocks have materially underperformed – tumbling 6.5% in August and now down 27.6% year-to-date. In the United States, the S&P 500 retreated 4.2% while the tech- heavy NASDAQ slid 4.6% as Treasury yields once again surged. Global fixed income returns were negative as well with the FTSE World Broad Investment Grade Bond (USBIG) index falling 3.2%.

Citi Global Wealth Investments’ (GGWI) Global Investment Committee added to its global fixed income allocation by increasing its exposure to short-term U.S. Treasuries and short-term U.S. Investment Grade Corporate bonds. To fund this shift, the GIC eliminated its overweight to global natural resources. These changes reduced our global equity position from neutral to a slight underweight. The global fixed income position is now slightly overweight.