Capital Market Outlook

IN THIS ISSUE

• Macro Strategy — Bigger Deficits Mean A Higher Neutral Rate: Federal Reserve policy is already close to neutral which helps explain why risk assets and profits have been rising this year instead of falling as they normally do when monetary policy is restrictive.
  
  
• Market View — The August Market Meltdown in Perspective: August tends to be a historically weak seasonal period for the S&P 500, but a strong first half is typically a positive signal for a strong second half.
  
  
• Thought of the Week — Early Signs of a Thawing Housing Market?: Housing and housing-related industries are all part of the rate trade, meaning a more meaningful improvement in demand hinges on lower interest rates.