During July we observed solid returns mainly in the equity markets. The stock indexes: S&P 500, ACWI* and NASDAQ, accumulated returns of 3.11%, 3.55% and 4.05%, respectively in the period. In the fixed-income markets, high-risk U.S. corporate bonds stood out, with a 1.38% increase in the month, due to the resilience of the economy, which continues to deliver better-than-expected data.

On macroeconomic issues, 187,000 new jobs were created in the U.S. during July, keeping the 3.5% unemployment rate at historically low levels. The labor report showed mixed data, while job creation and job openings were below expectations, wage growth surprised slightly to the upside.

On the other hand, the 2nd quarter corporate results of the S&P500 companies surprised favorably, as more than 70% of them have exceeded expected earnings despite having lower revenues. This is mainly due to the fact that companies have increased their prices to pass on costs to the final consumer and thus defend their margins. However, as inflation continues to decline, companies will see their power to increase prices reduced and, therefore, forced to adopt layoffs and/or cost cuts to protect their margins. This dynamic should lead to a gradual moderation in the labor market.

Finally, on August 1, one of the three largest rating agencies in the world, Fitch Ratings downgraded the U.S. government's long-term credit rating from AAA to AA+, the main reasons being: rising short-term fiscal deficits, unsustainable debt and deficit trajectories, and polarization on the part of policymakers to solve them. However, it should be noted that the U.S. market is the deepest and most liquid in the world. At Grupo Inversión we believe that the downside impacts will be limited and gradual, but note that the trajectory of higher deficits could be a problem if the economy is entering a secular shift towards higher interest rates.

Grupo Inversión's committee agreed to take advantage of this new increase in rates to increase fixed-rate holdings in its portfolios in order to position itself for the medium and long term.