Equities
Global equities posted a broadly positive August, led by Japan and US large-cap growth. The Nikkei 225 was the standout performer, gaining +4.0% on the month. US tech drove domestic gains, with the Nasdaq Composite up +1.8% and the S&P 500 up +1.1%. The Dow Jones finished essentially flat, while the Russell 2000 (-0.9%) and Euro Stoxx 50 (-0.1%) lagged.
The month had two distinct phases. Early August saw a strong risk-on rally — on August 4, hopes for an agreement to reopen the Strait of Hormuz lifted the S&P 500 and DJIA to all-time highs, with the Nasdaq 100 jumping 3.3% and chipmakers posting their best four-day rally since 2020. (1) A strong Q2 earnings season — with profit growth reportedly running above 30% — provided additional tailwind, though analysts flagged that pace as unsustainable into 2027. (2) The second half of August saw a reversal, with a chip-sector rout on August 24 dragging the Nasdaq 100 down 1.4% as reports emerged that Nvidia AI chip server prices were going up more than 15% in many cases. (3)
Fixed Income
Rates moved higher across the curve in August, with the 2-year yield rising ~10.5bp to 4.34% and the 10-year rising ~7bp to 4.75%, producing a modest steepening. The month featured two landmark Treasury auctions: a $42 billion 10-year sale on August 12 cleared at 4.683% — the highest yield since 2007 (4) — followed by a $25 billion 30-year auction on August 13 at 5.216%, the highest since 2001. (5)
Treasury Secretary Bessent announced a plan to expand bond buybacks to contain long-term borrowing costs, which caused 30-year yields to whipsaw — falling 9bp one session before jumping 6bp the next as markets questioned the plan's durability. (6) At Jackson Hole, Fed Chair Kevin Warsh reinforced his hawkish stance, causing front-end real rates to surge and the curve to steepen into month-end. (7) An in-line CPI print on August 12 provided a brief reprieve, easing near-term rate hike fears. (8)
Credit spreads diverged: IG OAS (Bloomberg US Agg Corporate) widened modestly from 77bp to 78bp, peaking at 81bp on August 18. HY OAS tightened by 10bp over the month from 271bp to 261bp, also peaking mid-month at 275bp, reflecting resilient risk appetite despite the rates volatility.
Commodities
Commodities were the strongest-performing asset class in August. Gold surged +9.4% to $4,437/oz, reaching an intra-month high of $4,657 on August 25, driven by geopolitical uncertainty and the rates volatility. WTI crude gained +6.7% to $85.76/bbl — Middle East tensions and uncertainty around the Strait of Hormuz were key drivers, with WTI touching $87.83 on August 20 before pulling back. (9) Natural gas rose +5.5% to $2.94/MMBtu, closing at its monthly high.
FX
The US dollar softened modestly in August, with the DXY falling -0.5% to 99.43. EUR/USD gained +0.9% to 1.1618, with the euro strengthening particularly in the second half of the month as the dollar weakened around the Bessent buyback announcement. USD/JPY rose +1.6% to 159.74, touching 160.09 on August 28 — yen weakness persisted despite the BOJ's ongoing policy normalization path.
Key Macro Themes
Strait of Hormuz: Geopolitical tensions around the five-month-old Iran conflict and the Strait of Hormuz were a recurring driver — fueling oil price volatility and alternating risk-on/risk-off moves throughout the month. (10)
Fed & Rates: A softer-than-expected July jobs report on August 7 pushed back rate hike expectations to no earlier than December. (11) Jackson Hole reinforced Chair Warsh's hawkish credibility after a July misstep, with front-end rates surging into month-end. (12)
Treasury Supply: Record auction yields at the 10-year (4.683%, highest since 2007) and 30-year (5.216%, highest since 2001) underscored investor demands for greater fiscal risk compensation. (13)
Bessent Buyback Plan: Treasury Secretary Bessent's surprise announcement of expanded bond buybacks generated significant volatility in long-end rates and narrowed the 30-year swap spread to its tightest since February. (14)
AI & Semiconductors: The chip sector was a key swing factor — a strong early-month rally gave way to a sharp rout on August 24 as Nvidia AI server pricing concerns weighed on sentiment. (15)
Bottom line: August 2026 was a month of two halves — a strong early rally on Hormuz optimism and earnings strength, followed by a rates-driven reversal as Treasury supply, hawkish Fed signals, and chip-sector concerns weighed on risk assets into month-end. Commodities and gold were the clear winners; small caps and European equities lagged.
*Approximate first-trading-day level based on available data.