US market sentiment was optimistic, as equities rebounded strongly. The focus returned to corporate earnings and the possibility of slowdown in both rate hikes and inflation, market sentiment improved in the meantime as earlier worries including inflation, and fears of recession alike were shoved aside. Over the month of July, the Dow, S&P 500, and the NASDAQ surged 6.73%, 9.1%, and 12.35% respectively. With inflation remaining in multi-decade high, the US Fed announced a further 75 bps hike in July, in line with market expectations. After the meeting, Fed President Jerome Powell mentioned possible slowdown in rate hikes ‘some time’ in the future for the first time, raising market expectations on gradual easing of the monetary tightening. Corporate earnings were also one of the main catalysts, as the overall earnings turned out better than feared, the renewed optimism from their management also helped lifted market sentiment. Fundamentals on the other hand have visibly worsened, with both manufacturing and services PMIs hitting their 2 year lows. While Q2 GDP in the US continued to contract marking a technical recession, authorities disagreed, citing the strong labour market. Unemployment rates are close to historic lows, creating further upward wage pressure. As we expect high inflation to persist in the short term, monetary tightening from the Fed would stay, pressuring equity valuations and financing conditions in the real economy, recessionary risks remain elevated. Henceforth, we would remain cautious on the US equity market, and awaiting further correction before reconsidering re-entry.