Weekly Macro Report, August 23 2026

S&P 500 traded at 7,674.37 on Aug. 21, 2026, up 21.5% year over year, signaling strong equity momentum. US GDP grew 1.5% annualized in Q2 2026, while the Fed funds effective rate held at 3.63% on Aug. 19, 2026, a restrictive but steady policy setting that points to slower near-term growth, softer hiring, and inflation still above the Fed’s comfort zone.

The labor market weakened in July 2026: nonfarm payrolls fell 23,000, May–June were revised down by 103,000, and the unemployment rate edged to 4.1% mainly because labor force participation slipped to 61.4%. Weekly claims stayed contained at 199,000 on August 1 and 206,000 on August 15, but the softer payroll trend argues for a more dovish Fed path and keeps rate-cut odds elevated.

As of Aug. 20-21, the 10-year Treasury yield moved from 4.65% to 4.69%-4.74%, keeping benchmark borrowing costs elevated for households, businesses, and investors. The 30-year fixed mortgage rate was 6.69% on Aug. 6, and recent drift higher near 6.7% keeps affordability tight for homebuyers while preserving yield for bond investors.

As of August 21–22, 2026, the US curve remains positive, with the 10Y at 4.69% and 2Y at 4.19%, while the 10Y TIPS real yield is 2.35%; together, they point to still-firm growth expectations. Credit markets look constructive as well, with US high-grade and high-yield spreads still tight, signaling solid investor risk appetite.

As of July 2026, U.S. headline CPI was 3.4% y/y and core CPI 2.5%, with shelter still the main driver and energy a drag after a 1.5% monthly drop. July PPI data were not available here. The 10-year breakeven rate was 2.34% on Aug. 21, 2026, signaling inflation expectations priced into TIPS remain near 2.3% and above many global peers.

Through June 2026, M2 rose to $23.155T, up 0.4% m/m and about 3.9% y/y, while July CPI slowed to 3.4% y/y and 0.1% m/m. Liquidity is expanding more slowly than nominal activity and is mildly restrictive rather than inflationary; M2 gains are being driven mainly by higher M1 and a steady build in small time deposits and retail money funds.

As of Aug. 14–21, 2026, Michigan sentiment is 51.0, with Current Conditions at 51.8 and Expectations at 50.6, a narrow -1.2 spread. The US yield curve is normal, with the 2s10s spread around +0.50 pp and the 10Y near 4.74%, signaling markets still price growth and policy cuts ahead.

In July 2026, existing-home sales fell 1.7% m/m to 4.06 million while the median sale price rose 2.0% y/y to $434,100, with inventory at 1.54 million units and a 4.6-month supply. Mortgage rates averaged 6.65%–6.67% in mid-August, keeping affordability tight even as supply is no longer historically scarce. The market looks roughly balanced on paper, but elevated borrowing costs are still suppressing demand and limiting buyers’ purchasing power.

As of Aug. 21, 2026, sector leadership was broad but uneven: Materials, Health Care and Energy were strongest, while Utilities, Industrials and Communication Services lagged. XLB led the day on industrial metals strength; XLV was supported by defensives; XLE remained the YTD leader on energy cash flows and oil sensitivity, while XLU and XLC stayed under pressure.

As of 21 Aug 2026, US valuation multiples remain stretched: S&P 500 P/E is 29.6, Shiller PE 42.1, and the Buffett Indicator about 240%. Versus global peers, the US still trades at a clear premium, driven by mega-cap tech concentration, stronger earnings momentum, and persistent capital flows into large-cap growth, while non-US markets remain notably cheaper on forward P/E and price-to-book.

As of Aug. 21, 2026, the VIX fell to 15.13, down 5.5% on the day and well below its Jul. 23 level of 18.70. July factor data showed Momentum at 3.35% monthly return, while Quality, Size, Low Volatility, Dividend Yield, and Value were all positive, with S&P 500 at 4.45% YTD and Low Volatility at 16.73% YTD. This mix points to a risk-on market with lower stress, but still selective leadership rather than broad, uniform strength.

US equities have set a new high-conviction lead, with the S&P 500 up 12.4% YTD through Aug. 20, 2026 and near 7,786 on Aug. 14. Japan remains the standout rotation trade: the Nikkei 225 was still 54.85% higher year on year on Aug. 21, but its 1-month change turned slightly negative at -0.15%. Germany is more tactical, with the DAX up 7.28% year on year and 3.90% over the past month as of Aug. 21, signaling renewed but narrower European participation.

Copper rose 2.93% w/w to $6.46/lb in the first week of August 2026, driven by Congo’s export ban, the Gresik smelter outage, and U.S. tariff-driven stockpiling; LME copper also gained 0.6% w/w in mid-August as inventories stayed tight. Gold climbed to a 3-month high on 21 Aug 2026, supported by a weaker dollar, lower Treasury-yield pressure, and demand for macro hedges after softer U.S. data and the Fed’s July pause.

Bitcoin traded around $77.2K on Aug. 22, 2026, with Ethereum near $2.42K, leaving BTC dominant but ETH recovering faster on a percentage basis. The market cap sat near $2.61T on Aug. 16, while recent gains were driven by ETF flows, regulatory clarity hopes, and lower long-term Treasury yields.

As of 21–22 Aug 2026, the USD stayed firm but mixed: DXY was 98.839 on 21 Aug, while EUR/USD was 1.1679 and GBP/USD 1.3644, signaling still-tight US rate support and steady capital inflows. JPY remained weak near 159 per USD, CAD firmed to 1.3760, AUD reached 0.7171, CHF 0.8012, and NZD tracked higher via the ECB’s 21 Aug cross; this mix supports trade competitiveness outside the US, keeps import-price pressure contained in USD terms, and leaves major central banks cautious.

As of Q1 2026, U.S. gross federal debt was 122.6% of GDP, with public debt at 98.7%; household debt was 68.5% in Q2 2025. Peer comparisons show the U.S. remains above most advanced economies on government leverage, while household leverage is still below Canada and Australia. The main risk is rising interest costs, which can crowd out fiscal space and keep long-duration yields volatile for policymakers and investors.

In the month ahead, Sep 4’s jobs report, Sep 11 CPI, and Sep 16 FOMC decision will dominate rate expectations. A hot CPI or stronger payrolls/unemployment print could keep the Fed on hold and lift front-end yields; a cooler read would increase odds of a cut. Sep 1 JOLTS and weekly initial claims on Sep 3/10/17 will gauge labor demand and help shape the Fed’s policy path.