Monthly market review

No ‘Recess’ For Markets In August Strong Earnings And Soaring Commodities Earn ‘Top Grades’ As Bonds Struggle

Economy | The Economy Earns a Mixed ‘Report Card’: Strong Growth, Softer Jobs

• The 2nd reading of 2Q26 GDP (+1.5% QoQ annualized) • Total nonfarm employment for the year through March • Despite Moderating Growth, Underlying Consumer was unchanged from the first preliminary reading. 2026 was likely overstated by 79k, according to Demand Has Held In Remarkably Well. Final sales to domestic purchasers—which excludes preliminary benchmark revisions, reducing average • Chairman Warsh Warned The Fed May Have More net exports, changes in inventory, and government monthly job growth closer to ~11k vs. 17.6k estimate. ‘Work To Do’ If Inflation Fails To Moderate. spending—was revised higher to +4.2% (from +3.9%), • July headline CPI inflation (+3.4% YoY) increased at a • US-Iran Fail To Reach Permanent Peace Deal As The the strongest pace of growth since 1Q23. slower pace than the prior month (+3.5%), as shelter Path To An Agreement Is Proving Difficult. • Real-time activity metrics continue to highlight prices eased (+3.2% YoY vs. 3.3% YoY in June). consumer resiliency. Hotel bookings, department Meanwhile, core CPI (+2.5% YoY) increased at the • The US Economy Loses 23k Jobs In July And The Unemployment Rate Falls To 4.1% (From 4.2%) store spending, and restaurant bookings are all slowest pace since February supported in part by the Given A Decreasing Labor Force. pointing to a healthy consumer. seventh consecutive monthly decline in prescription • In his first Jackson Hole speech as Chairman of the drug costs. • Headline Inflation Cools To +3.3% YoY Driven By A Smaller Increase In Shelter Prices. Federal Reserve, Chairman Warsh reaffirmed the • Consumer Confidence (89.4) fell to the lowest level Fed’s commitment to its 2% inflation target, defended since January. Year-ahead inflation expectations rose to • The 2-Year Treasury Yield Rises To Near The Highest the shift away from forward guidance, and struck a 5.8% (from 5.6%), while the ‘Expectations’ component Level Since Feb 2025 As Rate Expectations Climb. hawkish tone on growth and inflation—opening the registered its largest decline since January (-7.8% MoM). • S&P 500 Rallies Despite Geopolitical Tensions As door to a potential rate hike in September. • Retail Sales Control Group fell -0.4% MoM, its first Investors Return To Mega-Cap Tech/AI-Related • The US and Iran failed to reach a permanent peace monthly decline in seven months. Gasoline station sales Names On The Back Of Healthy Earnings Growth. deal within 60 days of the June 17 memorandum of fell for the second straight month—the first time this • Small Caps Underperform Large Caps By Widest understanding. With the conflict now extending component has fallen for consecutive months since May Cumulative 2-Month Margin Since March 2025. beyond the six-month mark and both sides holding 2025—reflecting lower gas prices. • Emerging Market Equities Are Back in the Spotlight firm on demands the other considers unacceptable, • Housing data was mixed. Housing starts (-12.4% MoM) As Investors Add to High-Growth Tech Companies. the prospect for a lasting resolution remains elusive. and new home sales (-10.5% MoM) declined in July, • Grains Increase At The Fastest Monthly Pace Since • August ISM Manufacturing (54.6) remained in while building permits (+4.3% MoM) increased for the April 2021 As Shipping Disruptions In The Black Sea expansion territory for the eighth straight month. The first time in three months. Home prices, as tracked by Send Wheat Prices Soaring. new orders component was the weakest since March the 20-City Case-Shiller Index (+2.1% YoY) increased at • Precious Metals Rally, Ending Their Longest Monthly (53.7), though continued to indicate overall growth. the fastest pace since June 2025. Losing Streak Since October 2022 As Investors Turn • The unemployment rate fell to 4.1% in July due to a • Euro Zone Manufacturing PMI (52.8) rose at its fastest More Defensive. decline of ~264k from the labor force. The economy pace since May 2022, supported by stronger activity in lost jobs (~23k) for the first time…