The Dollar drops as the Fed hints on rate cuts and equities stumble – Month in Review: July 2024
Macroeconomic Environment Review
The FX market witnessed increased volatility in July. The US Dollar Index came under pressure as market participants reassessed the Federal Reserve’s monetary policy path. While the Fed reaffirmed its commitment to bringing inflation under control, there were several indications that suggested that the US central bank would cut rates in September, driving the currency lower against its peers. The Euro and Sterling consolidated facing headwinds due to concerns about the eurozone’s economic growth and the ongoing geopolitical tensions but it was the Japanese yen that gained considerably, especially after the Bank of Japan decided to raise rates after an extended period of time.
At the same time, the US equity market exhibited a mixed performance in July. After a strong rally in the previous months, investors adopted a more cautious stance as concerns about a potential economic slowdown resurfaced. The release of economic indicators, such as GDP growth and employment data, fell short of expectations, dampening investor optimism. Consequently, major indices like the S&P 500 and Nasdaq Composite experienced moderate declines and now the question becomes whether the Fed will proceed with only a 25bps cut in September or succumb to the voices asking for a more accommodative policy, suggesting a 50bps rate cut is more appropriate.
Monthly Performance Review
During July 2024, AENAON Systematic Strategies generated the following total returns:
Across the spectrum of our benchmark indices, our strategies’ performance during July was rather muted. As a comparison, the US S&P 500 equities index gained 1.13%, the Barclay Hedge Fund Index posted a 1.72% advance, the Barclay CTA Index lost -0.53% while the other benchmark indices can be seen on the chart below.
Chart 1: Monthly Performance vs. Benchmark Indices – July 2024
Charts 2, 3 and 4: Inception-to-Date Performance vs. Benchmark Indices
You can always review our updated factsheets at the following Fundpeak links, with monthly performance updates and statistics since inception:
