Monthly Market Report – August 2026

During August, news from Iran generated significant volatility in oil prices, despite the barrel ending the month with little change compared with the close of July. The Brent benchmark fell below $80 before subsequently rebounding to $95. Despite the fragile situation in the Strait of Hormuz, approximately 15 million barrels manage to cross the strait daily thanks to the effectiveness of the corridor established by the United States.

Regarding fixed income, US government bond yields continued to rise during the first half of the month. The 10-year benchmark yield reached 4.75%, while 30-year bonds exceeded 5.30%, a level not seen since June 2007.

This prompted action by the US Treasury; the institution headed by Scott Bessent announced that it would double the amount allocated to debt purchases, focusing on the longer end of the yield curve (maturities between 10 and 30 years). The move had a limited effect, bringing yields down to levels slightly below those at which they had started the month.

Another factor that had a clear impact on the US yield curve was Kevin Warsh’s speech at Jackson Hole. At the annual symposium of central bankers held in the USA, the Fed chair focused the institution’s attention on inflation, acknowledging that current levels remained far from the target and that action would be necessary if prices failed to return towards the 2.0% level.

Leaving the door open to interest rate hikes significantly increased the likelihood of action by the Fed at its next meeting. The market priced in a 60% probability of a US interest rate hike in September, which translated into selling pressure on short-term debt, with the consequent rise in yields.

European fixed income continued to perform poorly, following the trend observed in July. Yield curves across the Old Continent shifted significantly upwards across all maturities. The German 10-year benchmark yield reached 3.32%, its highest level since April 2011. The poorer performance of the French yield curve is worth highlighting, as it reflects an increase in political and fiscal risk in the country. The French 10-year benchmark closed the month with a yield of 4.17%, implying a higher risk premium than countries such as Italy or Greece.

A further interest rate hike by the ECB in September is fully priced in. Rising inflation and crude oil’s reluctance to correct are contributing to market expectations of a more restrictive monetary policy in the Eurozone. If confirmed, interest rates would rise to 2.50% from the current 2.25%.

Equity markets performed positively in August, particularly US indices. The Magnificent Seven were the main contributors to returns, with NVIDIA standing out after gaining close to +10% following the release of its results. The company exceeded earnings-per-share estimates by 6.10% and announced expected growth of 70% by 2028, which was the main catalyst behind the rise in its share price.

The S&P 500 followed a pattern of gains that gradually weakened over the month, although it managed to close August up +2.62%. On 13 August, the index reached a new all-time high after breaking above the 7,800-point level for the first time. Other technology stocks also performed positively, resulting in gains of +4.18% for the Nasdaq-100.

European equity markets closed with more moderate gains. The Euro Stoxx 50 rose +0.98% in August, coming under pressure during the final sessions due to political uncertainty in France and a rotation away from traditional, industrial and defensive stocks towards technology. The benchmark European index has accumulated a return of +10.86% in 2026, below the +12.28% recorded by the US S&P 500.