July 31, 2026
July was a volatile month for markets as investors reacted to new inflation numbers, central bank decisions, and earnings from large tech companies.
In the U.S., inflation cooled compared to the month before. CPI fell to 3.5%, down from 4.2%, while Core CPI moved lower to 2.6%. PCE inflation also eased to 3.7%, but Core PCE stayed higher at 3.3%. This was positive, but inflation is still above the Fed’s 2% target.
The Federal Reserve kept interest rates unchanged at 3.50%–3.75%. Some policymakers are still worried about inflation, so markets remain unsure about what the Fed will do next.
In Europe, the ECB also kept rates unchanged after raising them in June. Energy prices and the situation in the Middle East are still risks, so the ECB is taking a careful approach.
Earnings were also important in July. Microsoft reported strong results, helped by cloud and AI. Amazon also had a strong report, with AWS growth improving. This supported confidence in Big Tech, but high valuations and heavy AI spending are still things to watch.
Overall, July showed that markets can recover quickly, but they are still sensitive to inflation, interest rates, earnings, and geopolitical risks.
Looking ahead, August will bring more inflation data and more earnings updates. These will help guide markets during the rest of the summer.
As always, I remain focused on staying patient, diversified, and disciplined.... Show More
Not investment advice. The author may have financial interests in the mentioned instruments.
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