Market Intelligence US Morning Update

Equity Research 21 August 2026 | 8:56AM EDT

Market Intelligence: US Morning Update

Click “here” to listen to the US Morning Call. Chris Hussey | Stocks in Asia traded higher Friday, but almost all markets still traded down for the Goldman Sachs & Co. LLC

week as investors reacted overnight to a positive mid-month Korea exports report — Sarah Herr | exports are up 3.1% for the first 20 days of August after being flat a month ago (see Goldman Sachs & Co. LLC

“South Korea: Rebound in Early August Exports, Led by Accelerating Chip Demand”). Kshitij Garg | Investors this week have also been navigating an uncertain China consumer path (see Goldman Sachs India SPL our economists’ latest update of high frequency data in “China Economic Activity and Policy Tracker: August 21”). In Japan, Bruce Kirk explores how concentrated investment activity in AI and BoJ policy-driven stocks may have left the Japanese equities market particularly vulnerable to a sudden momentum reversal in “Keeping up with the Japanese indices; cross-shareholding unwind momentum remains strong.”

In Europe, stocks are edging higher this morning, but like Asia the STOXX 600 is still on pace to lose 1% for the week. Mid-month PMI business sentiment surveys released by S&P this morning show sentiment holding steady from a month ago and coming in a bit better than expected (see “Europe August Flash PMIs: Stronger Activity But Mixed Price Pressures Across the Channel”).

Across asset classes, yields on 10-year Treasuries remain elevated at 4.71% — unchanged now from the pre-Treasury buyback announcement (see Friedrich Schaper’s note discussing the impact of the Treasury announcement in Thursday’s note, “Fed Communication And Term Premium”). Oil prices also remain elevated although little changed overnight.

Positioning corner. Ben Snider and Ryan Hammond update our quarterly positioning analysis across both hedge funds and mutual funds in two notes this week, “Hedge Fund Trend Monitor: Down but not out” and “Mutual Fundamentals: Rebalancing act.” Hedge Funds had a strong 2Q but then struggled as AI momentum unwound in July. Our Hedge Fund VIP list of the most popular long positions suffered its worst 1-month underperformance vs. the S&P 500 in more than 20 years of history, and July marked one of the sharpest hedge fund de-grossing episodes of the past decade. The good news: US equity long/short hedge funds have returned 10% through mid-August and the crowding we had seen in 2Q is much less pronounced post July’s sell-off. As for Mutual funds, more funds than usual (41% vs 37% on average) are outperforming their benchmarks — somewhat helped, perhaps, by an inability to keep up with the weight of AI in indices.

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Consumer spending subdued: Megan Peters highlights how consumer balance sheets (net worth and debt service) remain as strong as ever across many developed markets in an updated “G10 Consumer Dashboard: July 2026: Spending Starts to Slow.” Earlier this week, Ronnie Walker wrote that consumer spending growth should slow in 2H26 to a below-trend pace of 1-1.5% in “Earnings Season Takeaways: Consumer Strength Before the Slowdown.” And we are starting to see signs emerging of an impending slowdown, including:

1. Real income is weak in the US, Canada, and the EU — reflecting the pressure of higher energy prices. 2. Last 3 months core retail sales growth in the US appears to have slowed to only +1.1%. 3. Consumer sentiment is particularly disconnected from activity.

Looking Ahead Keep an eye on S&P Global’s US Manufacturing and Non-Manufacturing PMI surveys this morning. On the earnings front, BJ reports ahead of the open.

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