Weekly Market Update (Aug 15, 2026)
HIGHLIGHTS
The USD strengthened slightly this week. Moderating inflation data led markets to scale back expectations of a Fed rate hike, resulting in a decline in US Treasury yields.
- Earnings: Q2 earnings remain strong, supported by AI infrastructure stocks accounting for around half of EPS growth. However, the impact of AI adoption on earnings remains narrow.
- Central Banks: Soft PPI, CPI, and retail sales results support the Fed keeping rates unchanged. Markets expect the Bank of Japan to hike rates in September instead of October. They also expect a European Central Bank hike and the Bank of England to remain on hold in September.
- Geopolitical: The Middle East conflict has reached a stalemate, as neither side has shown willingness to soften its position. The geopolitical risk premium remains elevated.
MARKETS
| Nasdaq | 26,729.16 | +0.14% |
| S&P 500 | 7,785.76 | +0.36% |
| Dow | 53,732.41 | -0.56% |
| 10-Year | 4.7% | +4bps |
| Brent | 88.52 | +5.95% |
| DXY | 99.64 | +0.04% |
*Data as of market close. 5-day change ending on Friday.
VIEW FROM THE STREET
Equity
UBS: Global earnings strength, structural growth trends, and an improving cyclical backdrop are supporting the case for equity holdings. Diversified exposure can help investors benefit from the broadening equity rally while navigating uncertainty and volatility.
Morgan Stanley: In the last few years, valuation expansion has driven S&P 500 performance, but earnings have not. However, in the last few months, earnings have become the driver, potentially marking the midpoint of the cycle.
Fixed Income
UBS: High-yielding currencies can offer carry in a range-bound foreign exchange market through interest rate differentials. In Europe, we recommend the British pound. In Asia, we recommend the Australian dollar and the New Zealand dollar.
Morgan Stanley: Markets are dealing with rapidly rising debt issuance, as countries spend aggressively on defense, AI, and cybersecurity. Increasing long rates reflect higher term premiums and capital demand.
Economy
Goldman Sachs: The impact of AI on the labor market is narrow. There are employment drags in areas where AI use cases have been established, including marketing, design, and customer service. On the other hand, the impact is offset by construction jobs for data center buildouts.
Standard Chartered: Peak Fed hawkishness is likely already behind us, after weak nonfarm payrolls and inflation data. The Fed is now in a better position to pause rate hikes.