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August Market Commentary: The Silly Season Gets Serious Thumbnail

August Market Commentary: The Silly Season Gets Serious

Markets & Economy

July Recap and August Outlook

Summer is usually known as the “silly season,” when the headlines get lighter and the media fills space with fluff. Not this year. July was loaded with big moves: tariff drama, sudden shakeups among government officials, the President picking fights with both the Fed and the world’s richest man, and fresh data that rattled expectations.

The month started with the economy looking calm, making the earlier panic about tariffs feel a bit exaggerated. As trade talks inched toward actual agreements, markets seemed to settle in. Recession fears faded, jobs stayed strong, and inflation slowed, lowering the chances of a September rate cut.

At the end of July, the Fed held rates steady as expected. Chair Powell said no call had been made yet on a September cut, and the markets took that as a sign the odds were low.

Then August began with a curveball. Job growth slowed, inflation numbers came in softer than expected, and suddenly Wall Street was betting on a September cut again.

Let's dig into the data:

  • Inflation (CPI) rose less than expected. Prices were up 2.7% over the past 12 months and 0.2% for the month.
  • Non-farm payrolls were weak at 73,000 for July, well below the lowest forecast of 100,000. Previous months were revised down too.
  • Retail sales jumped 0.6% in June, more than double what economists predicted. These numbers are not inflation-adjusted.
  • GDP grew 3.0% in Q2, mainly because imports dropped.

What Does It All Mean?

Inflation rose at the fastest pace since February, but still came in lower than forecasts of 3.1%. That suggests tariffs haven’t hit consumers as hard as feared. Still, a CBS News poll shows 70% of Americans believe the administration isn’t doing enough to fight high prices.

And while stock gains and higher home values should boost confidence, spending among the wealthiest 20% has flattened this year, according to Moody’s Analytics. After two years of solid growth, that slowdown could signal caution from those who usually drive consumption.

So what will the Fed do? Powell keeps pointing to the Fed’s dual role: full employment and stable prices. With job growth cooling and inflation running below expectations, the case for cutting rates to support the economy is stronger now than it was just weeks ago.

Chart of the Month: Is the Labor Market Telling a Worrying Story?

After months of looking strong, the job market is showing cracks. The last two months brought the largest revisions in history, exposing weakness that wasn’t clear before.

Source: Bureau of Economic Analysis (data), Axios (visual)

July Equity Market Highlights

  • S&P 500: +2.17%
  • Dow Jones Industrial Average: +0.08%
  • S&P MidCap 400: +0.85%
  • S&P SmallCap 600: +3.85%

Source: S&P Global. All performance as of July 31, 2025.

Six of the eleven S&P 500 sectors posted gains. Tech led the way again, up 5.16%, while Health Care lagged, down 3.44%. Volatility kept falling, with no single trading day in July moving more than 1%. Earnings season is over halfway done, and nearly 79% of companies have beaten expectations so far.

July Bond Market Highlights

  • 10-year U.S. Treasury yield: 4.36% (up from 4.24% in June)
  • 30-year U.S. Treasury yield: 4.78% (down from 4.92% in June)
  • Bloomberg U.S. Aggregate Bond Index: -0.22%
  • Bloomberg Municipal Bond Index: +0.32%

The Takeaway

A rate cut in September is looking more likely, but the exact timing or size is less important than keeping your overall plan on track. The bigger picture is what really matters.

The recent tax law changes of the so-called “Big Beautiful Bill” come with plenty of headlines but not as much substance. While Congress sells it as a win for everyone, the reality is more complicated. For higher earners, the bill reshaped deduction rules and adjusted how certain charitable contributions are treated. On paper, that creates opportunities for strategic giving, but the benefits may not be as generous once you dig deeper.

Now is the time to review your plan with a critical lens. Look at how these changes affect your ability to give strategically, reduce taxes, and keep your wealth aligned with your values. The soundbites in D.C. are loud, but your financial plan should be built to cut through the noise.

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