August brought broad gains across global stock markets, supported by strength in technology, energy, materials, and resource-related companies. Emerging markets performed particularly well as gains expanded beyond technology, while developed international markets advanced despite geopolitical and economic pressures.
Bond markets remained resilient despite generally higher Treasury yields. Uncertainty surrounding Federal Reserve policy continued, while corporate credit conditions remained supportive.
Real assets delivered mixed results. Natural resources, energy, metals, and gold benefited from geopolitical tensions, commodity demand, artificial-intelligence infrastructure spending, and defensive investor positioning. Infrastructure and real estate struggled under elevated borrowing costs.
Looking ahead, key concerns include geopolitical instability, monetary-policy uncertainty, government deficits, and the durability of economic growth. Business investment is increasingly important as consumers face pressure, while investors continue assessing whether artificial-intelligence spending can produce sustainable productivity improvements and potentially attractive financial returns.
Equities
U.S. equities, as represented by the Russell 3000 Index (+2.7%), generated positive results during the month of August, primarily due to favorable earnings across technology, which continues to represent more than one-third of index assets. While semiconductors and semiconductor equipment were buoyed by gains from Nvidia (+10.0%) and Micron Technology (+16.5%), software (+13.8%) had its second consecutive strong month following performance weakness that persisted from late 2025 through the first half of 2026.
Microsoft (+9.4%) had a positive month, but it was stocks such as Salesforce (+40.0%), Palantir Technologies (+51.5%), and ServiceNow (+33.1%) that posted outsized gains, rallying off of weakness attributable to fears of AI disruption. Technology strength accounted for outperformance of the Russell 3000 Growth Index (+3.6%) relative to the Russell 3000 Value Index (+2.0%), although value remained ahead of growth by nearly 1,900 bps YTD through the end of August. Energy (+7.2%) was a top-performing sector due to sustained high oil prices, while materials (+7.8%) rebounded in August. Healthcare (+5.1%) benefited from strength across a select group of stocks within biotechnology (+9.6%), while traditionally more defensive sectors including consumer staples (−0.6%), utilities (−4.4%) and real estate (−2.4%) were down for the month.
Emerging markets reversed, rising 3.4% and once again outperformed global markets. Performance broadened beyond technology during the month. Korea (+5.9%) and Taiwan (+6.4%) rebounded alongside the broader global tech rally. Korea’s KOSPI Index entered bull market territory on August 11 following its sharp July sell-off, underscoring both the market’s sensitivity to the AI theme and continued volatility. Taiwan also benefited from the rebound, with investors increasingly viewing the market as a more stable way to participate in the AI theme.
Strength in metals also extended into emerging markets, where materials was the top-performing sector (+13.7%), supported by gains in precious and base metals. South Africa (+7.0%), with its significant resources exposure, was among the strongest markets as sharply higher gold and platinum prices boosted mining shares.
Gold benefited from safe-haven demand amid geopolitical uncertainty, while base metals continued to be supported by expectations for increased demand related to AI infrastructure investment. A weaker U.S. dollar and shifting Federal Reserve expectations provided an additional tailwind for emerging markets.
Developed non-U.S. equities (+2.0%) continued to churn upward, notching their fifth consecutive monthly gain in spite of rising energy costs, drought in Europe, and ongoing geopolitical conflict. Technology (+3.9%) and financials (+1.7%) continued to do well, but it was metals/mining (+12.3%) companies that saw the strongest rally owing to the AI buildout and renewed demand for precious metals.
From a country perspective, Japan (+3.4%) remained in the spotlight because of continued volatility around the yen (−0.3%). The effects of the U.S. and Japan’s joint intervention at the end of July proved to be short-lived.
The yen closed the month down relative to the USD, coming under pressure late in the month after Fed Chair Kevin Warsh struck a hawkish tone in Jackson Hole.
Fixed Income
July’s Federal Reserve meeting left fixed income investors disappointed with Chair Kevin Warsh, as his communication reinforced uncertainty around the Fed’s reaction function. His Jackson Hole speech represented something of a reset, with a more balanced message that appeared intended to restore confidence in the Fed’s reaction function and acknowledge the evolving risks to the outlook.
Investors continued to question how readily the Fed would translate a softer rhetorical stance into actual policy action, particularly with inflation pressures still relevant and longer-term yields remaining elevated. As a result, by the end of the month, markets were pricing in rate hikes that exceed the FOMC’s guidance from the June Summary of Economic Projections.
Treasury yields generally moved higher during August, although the increase was concentrated at the front and intermediate portions of the curve. The three-month T-bill yield rose 6 basis points to 3.82%, the two-year Treasury yield increased 7 basis points to 4.34%, and the ten-year yield increased 4 basis points to 4.75%, while the 30-year yield edged 1 basis point lower to 5.24%.
As a result, the yield curve modestly flattened: the 10-year/2-year spread narrowed from 44 to 41 basis points, while the 30-year/5-year spread compressed more noticeably from 83 to 74 basis points. Despite the upward move in most yields, returns in Treasuries were positive, with a 0.3% gain in three-month T-bills, a 0.2% advance in 1–3 year Treasuries, and a 0.1% modest increase in 5–10 year Treasuries. Long Treasuries benefited from a slight decline in yields and gained 0.8%.
Credit markets were generally constructive during the month. High yield corporate spreads tightened 18 basis points, from 279 to 261 basis points, while investment grade corporate spreads were unchanged at 78 basis points. High yield bonds returned 1.0% in August, outperforming investment grade corporates, which gained 0.4%.
Securitized sectors also posted positive results: ABS returned 0.3%, agency MBS gained 0.5%, and CMBS advanced 0.2%. Spread movements within securitized credit were mixed, with agency MBS spreads tightening 2 basis points to 29, CMBS spreads unchanged at 66, fixed-rate ABS widening 2 basis points to 44, and floating-rate ABS unchanged at 82 basis points.
REGIME INTERVENTION
Treasury Secretary Scott Bessent has taken a more active role in market functioning, including coordination with Japanese authorities during the late-July intervention—aimed at stabilizing the yen—and by increasing the size of a buyback program to improve liquidity in less-traded Treasury securities and support market functioning in August.
Real Assets
Real assets delivered mixed returns in August, with most commodity-linked segments seeing notable gains, while rate-sensitive categories struggled amid elevated bond yields.
Global natural resource equities gained 7.9%, led by metals and mining (+17.2%), which benefited from higher gold prices. Mining equities were also aided by increased demand for copper and industrial metals to support growing electrification trends and the AI buildout.
U.S. energy equities jumped 7.0% as Brent Crude finished the month above $90 per barrel on renewed hostilities in the Strait of Hormuz. MLPs gained 3.3% on strong volumes and higher commodity prices, with Henry Hub natural gas up 12.2% during the month.
Global infrastructure was down 2.3%, with notable weakness in utilities (−4.8%) as the U.S. 10-year Treasury yield approached a five-year high. Global real estate (−3.1%) was similarly impacted by this dynamic due to the segment’s capital-intensive nature. U.S. REITs (−3.0%) were in line with global markets. Lodging (−8.1%) and retail (−6.2%) were the worst performing REIT sectors as consumer discretionary spending showed signs of cooling.
Despite rising yields, gold jumped 9.4% on a renewed interest in safe-haven assets, given U.S. Treasury market turbulence and growing de-dollarization trends.
It is notable that Bitcoin surged 25.5% following the U.S. Treasury’s unexpected announcement that it would at least double the size of its long-dated bond buybacks. Some investors interpreted this as a return to liquidity expansion, contributing to renewed optimism for the cryptocurrency. Bitcoin’s correlation to gold has increased materially, with some investors viewing the asset as digital gold.
The Bloomberg Commodity Index gained 7.4%, with the agriculture subindex (+12.8%) seeing notable gains as tensions escalated in both the Strait of Hormuz and the Black Sea. Livestock futures (−4.5%) fell as the Trump administration’s near-term tariff exemption for beef imports signaled an influx of foreign supply. Precious metal futures rose 10.4%, largely in line with gold.
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