Monthly Review - August 2026
In brief
The markets
2.6%
-2.1%
0.8%
1.0%
2.5%
1.0%
-0.4%
2.6%
3.8%
Source: Bloomberg 31.08.2026, returns in local currency
Top stories
Rocky ride for bonds
The US Treasury stepped in with support for the government bond market, after prices fell and yields spiked higher. Longer dated bonds were particularly hard hit, with the US 30 year Treasury bond yield touching multi-year highs. Why these jitters? Inflationary pressures from the Middle East conflict are mounting, at a time when US government debt has topped $40 trillion. Added to this are the vast borrowing needs of the AI hyperscalers, which have diverted buyers away from the government bond markets. Meanwhile, equity markets told a different story, as the S&P 500 and Japan’s Topix index regained record highs.
Central bankers gather
While stablecoin digital currency was the official theme of this year’s Jackson Hole symposium, a spike in inflation remained front of mind for central bankers. After geopolitical tensions have hotted up consumer prices, extreme weather events are now contributing to upward pressure. Lack of water brought cargo restrictions on shipping through the Panama Canal, as well as Europe’s major rivers. These supply chain issues, coupled with poor harvests, could exacerbate price pressures further. Autumn rate hikes are expected from the Bank of Japan and the European Central Bank. And markets see an increasing likelihood of a US Federal Reserve hike before year end.
Jostling for AI market share
Two major US AI labs, OpenAI and Anthropic, stepped up their response to competition from cheaper ‘open source’ Chinese rivals. OpenAI slashed the price of some older models, while Anthropic launched new products aimed at more cost conscious users. Both AI groups are aiming for IPO this autumn, with a $2 trillion valuation flagged for Anthropic. Coincidentally, both experienced incidents where flagship AI models went rogue on the internet during cyber security testing. Meanwhile, chipmaker Nvidia created a $500 billion AI investment fund, reigniting concerns over circular investment within the sector.
US clean energy booms
Despite the US administration's efforts to thwart the energy transition and curb the rollout of renewable projects, solar and wind installations are set to reach a record high in 2026, with capacity rising by 45 gigawatts, according to S&P Global Energy. The cleantech boom is being driven by volatility in oil and gas prices as the Middle East conflict continues, surging power demand from data centres, as well as a rush by developers to capitalise on expiring tax credits. Extreme weather has also boosted demand for renewables, as solar and wind are among the quickest and most cost-effective ways of expanding grid capacity.
On the radar
The presidents of the US and China will meet in Washington later in September, as geopolitical tensions persist. However, the Chinese leader is not currently expected to speak at the 81st session of the United Nations General Assembly, due to take place concurrently in New York.
After the Q2 US earnings season brought a record number of positive surprises, attention will turn to growth forecasts for the coming quarters. A seasonality effect might come into play, as September has historically proved a tricky month for US equities.
Greece will rejoin the Euro STOXX indices on 21 September following its reclassification as a developed markets by STOXX in April. The move follows similar decisions by major international index providers including MSCI, FTSE, Russell and S&P Dow Jones.