Investors are still excited about equities, says Norton of Empower

Summary

Marta Norton, chief investment strategist at Empower, discusses the July CPI report, saying it keeps September Fed policy in play but not a guaranteed hike. She sees continued retail enthusiasm for equities and argues investors should stay fully invested while maintaining some cash optionality. In bonds, she flags rising real yields, term premium and fiscal concerns, and she advises being judicious with credit exposure.

• July inflation was subdued enough to reduce pressure for a guaranteed September Fed hike.
• Norton sees continued retail enthusiasm for equities in retirement accounts and retail flows.
• She argues the equity tone is not broadly speculative despite AI and inflation concerns.
• She says rising real yields, term premium and fiscal/debt supply concerns are keeping bond yields elevated.
• She sees less incentive to take credit risk because tight spreads offer less return for risk.
• She favors keeping some cash optionality to deploy after selloffs, especially for retirees.