July was another difficult month for investors, as Spain’s financial and economic crisis deepened and the eurozone’s problems spread well beyond its borders.

The themes that have dominated the direction of global financial markets and determined the shape of investors’ returns continued to prevail during July. Indeed, the only “new” investment theme to emerge is the consequence of another negative trend emerging, as the drought sweeping through the U.S. Midwest wreaks havoc on grain crops and propels many agricultural commodity prices to higher and higher prices.

As the month draws to a close, investors will be bracing themselves for another flurry of economic data – payroll figures, second-quarter growth calculations, global PMI figures – while awaiting the outcome of central bank meetings in Europe and the United States. While some U.S. economists are still urging the Federal Reserve to embark on a third rount of quantitative easing, it may be hard for those policymakers to act, given that the U.S. housing market appears to be moving into recovery mode.

Relatively few of the charts in this month’s package for you to ponder are devoted to what’s happening in the eurozone, specifically. But the impact of Europe’s sovereign debt crisis is now being felt globally, so the ongoing debate over what to do about Spain is now one with international repercussions. Moreover, in light of the decision by Moody’s Investor Service to issue a warning about the credit quality of the sovereign bonds from Germany, the Netherlands and other “core” members of the eurozone, it’s clear that the crisis is one that is Europe-wide and not confined to any single troubled member.

What’s the end game here? Pundits argue that it’s either some kind of debt mutualization – or an end to the experiment in monetary union. We’ll keep tabs on the debate as it unfolds in August and beyond.

 
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