Sticky Core Services Support Value Amid Persistent Inflation
The Federal Reserve's 2% inflation target remains elusive as sticky core services continue to drive price pressures. The latest Consumer Price Index (CPI) reading of 3.4% in July indicates that these persistent issues may resist the broader cooling trend.
In light of this, BNY Investments believes higher inflation and real yields will remain supportive for value investments. They argue that the current market conditions favor a diversified portfolio that combines growth and value stocks.
BNY sees opportunities in large banks with diversified lines of business, where deregulation and buybacks or dividends are tailwinds. The energy sector also presents attractive supply-demand dynamics in oil, gas, and refineries, although ongoing geopolitical conflicts have impacted oil price volatility.