Returns for most asset classes were negative in August due to higher treasury yields, a hawkish tone from the Federal Reserve, and economic uncertainty. Rising bond yields were in focus as the 10-year treasury yield increased from 3.97% to as high as 4.34%, before closing the month at 4.09%. Although inflation is trending lower, the Fed sent the message their work is not finished and additional rate increases may be required. Uncertainty about the Fed, inflation, and the economy weighed on risk assets. For the month, US large-cap stocks were down (1.6%), while small-cap stocks were down (5.0%). Developed market international stocks lagged, with the MSCI EAFE down (3.8%) and emerging market stocks down (6.1%). Core US bonds were down slightly for the month at (0.64)%. In this month's commentary, we focus on The Role of Cash in Portfolios and touch on the following topics:
- We share some facts about the cash markets
- We highlight some of the advantages and risks of cash
- We review historical performance relative to inflation and in different interest rate cycles
- Discuss the importance of keeping a balance between the need for safety and long-term growth
Please give us a call if you have any questions regarding the attached presentation or would like to discuss your investment strategy.
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