In the damp days that passed for summer this August, it has been inflation and interest rates that have been attracting attention. But, as ever, we need to look to the US if we are to gain a serious steer for the near future. The housing market in the US – as here – can give a good indication as to the strength of the underlying economy. Recent data points to a softening of demand. Sales of new and existing homes were expected to turn down as a consequence of higher interest rates but in the event, the decline was greater than forecast. It all points to a slowdown in consumer demand as the twin influences of dearer borrowing and higher fuel and energy costs start to impact on spending. The initial reaction was to push stocks lower but is there real cause for concern or is it just the summer doldrums dampening sales? The data that is emerging from the world’s biggest economy is painting a mixed picture but it would be unwise not to expect some slowing in the economy. The Fed may have paused in its monetary tightening but more increases, probably by the end of the year, should be expected. But the real victims of any slowdown in the US economy are likely to lie outside US shores. The American consumer has baled out the global economy many times in the past. Higher interest rates and slower growth could have a more acute effect in the countries of the Pacific Rim. So investors should consider over-weighting the US at the expense of those smaller, more vulnerable markets. Moreover, if growing concern over economic strength leads to a flight to quality, as well it might, it would be no more than prudent to favour larger caps over smaller companies. There is no reason not to favour equities over bonds, though, even if a more cautious approach looks sensible for the tail end of the year. While risks remain in the market, the undemanding valuation levels and likelihood of continuing, if slower, growth should ensure a positive outcome by the year end. What should we be doing in our home market, I hear you ask? Investment may have become more international but in the end, people usually feel more at home in their domestic market. We may struggle to keep pace with the US, which has, after all, underperformed recently, certain sectors, such as utilities, should continue to be buoyed by the underlying earnings growth that seems set to remain a feature, pretty much regardless of economic progress. And the likelihood of dividend rises on what are already respectable yields adds to their attractions. Boring they may appear but in these uncertain times, the value that these shares offer appears comforting.