Market Review - July 2021
Source: Zephyr Style Advisor
US stocks rallied and reached all-time highs in July, returning 2.4% for the month. News of a potential agreement on Biden’s $1 trillion infrastructure bill and steady progress of the American vaccine rollout helped push equities to record levels. International equities posted modest gains but lagged US stocks, reflecting increasing concerns of the new Delta variant spread in Europe. Emerging markets was the worst performing sector and the only one with negative returns, down -6.7% for the month. This underperformance can be attributed to the regulatory crackdown in China.¹
Across US market sectors, Healthcare and Real Estate were the top performers in July, returning 4.9% and 4.6% respectively. Energy ended its hot streak and was down -8.3% for the month but is still the year’s top performing sector with gains of 33.6% year to date.
US and Global bond indexes rose as interest rates fell in July. The yield on the 10-year declined to 1.23%, reducing fears of inflation. US bonds were up for a 4th consecutive month, posting gains of 1.1% but still remain down -0.5% for the year. All major bond sectors had positive returns in July led by Long Treasury and Treasury Inflation Protected Securities (TIPS), up 3.6% and 2.7%.
Gold returned 2.3% in July in reaction to a weakening USD (down -0.2%). Commodities had another stellar month and were up 1.8% in July. US and Global REITs were the best performing of the global market sectors, up 4.4% and 4.5% in July, and are now up 26.6% and 24.1% for the year.
Finally, relative to a globally balanced (60/40) equity/bond index, allocations to commodities, US REITs, global bonds and gold helped while global equities hurt for the month.
Source: Zephyr Style Advisor, Bloomberg, Reuters
[1] Reuters - Baffled investors fear nothing's off limits in China regulatory crackdown
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