by Maurice (Mo) Spolan, Investment Research Analyst
Stocks had a strong week as the S&P 500 finished up over 3%. The bellwether equity index returned over 7% this month, the best August performance since 1986. International equities also fared well over the past month. The Barclay’s Aggregate Bond Index was down about one half of one percent last week, ending August 1% in the red.

The noteworthy event of the week was Fed President Jay Powell’s virtual address. In a departure from legacy policy, the central bank is slightly altering its approach to inflation. Whereas in the past the Fed aimed to curb inflation above 2% via interest rate hikes, the central bank will now allow inflation to overshoot the target such that its long-term average is 2%. Inflation has been tame since the Great Financial Crisis, generally under 2%.

The market seemed to perceive Powell’s comments as affirmation of a “lower for longer” interest rate environment, which is a bullish dynamic for equities. VNFA Head of Investments, Bill Henderson, noted Powell’s intentions to direct monetary policy on a prospective, rather than reactionary, basis as further indication that the central bank will be accommodative going forward.