IGA Capital – Weekly Macro Report

Aug 17

3 min read

"Equities extended their summer rally last week, supported by back-to-back soft disinflation prints that reinforced expectations for the Federal Reserve to hold rates steady at its September meeting. While equity markets posted gains and short-term Treasury yields declined, long-end bond yields remained firmly anchored near multi-year highs due to persistent federal deficit concerns and structural issuance pressures. Simultaneously, energy market tail risks hardened following conflicting geopolitical claims over the Strait of Hormuz, expanded sanctions, and revised global supply shortfall forecasts. As traders push rate hike expectations out to 2027, the macro environment presents a stark divide between easing short-term monetary expectations and ongoing long-term fiscal and commodity headwinds."

Date: August 17, 2026

1. Economy & Financial Markets

Equity Performance: The S&P 500 posted its third consecutive weekly gain (+0.4% on the week) to reach 7,786. The Nasdaq Composite added 1.1% on continued AI momentum to close at 26,729, while the Dow Jones settled at 53,732.4. The CBOE Volatility Index (VIX) dropped 16.9% to 14.97, its lowest reading since late December.
Disinflationary Trends: July Headline CPI came in at 3.40% YoY, while Core CPI cooled to 2.50% YoY. July PPI was flat MoM (0.00%) and decelerated to 4.70% YoY.
Consumer Contraction: Equities pulled back late in the week following a 0.6% MoM drop in July Retail Sales, marking the second consecutive monthly decline in the GDP-control group.
Commodities & Geopolitics: WTI Crude Oil rose to $82.80/bbl amid hardening geopolitical stances surrounding the Strait of Hormuz. The EIA estimated supply disruptions reaching 600k bpd through 2027, and the IEA expanded its Q3 global shortfall projection to 1.8MM bpd. Spot Gold surged 10.5% over the past month to $4,398.40/oz, and Silver closed at $65.67/oz.

2. Key Macroeconomic, Commodity & Asset Snapshot

(Source: Bloomberg / Walker & Dunlop, Data as of August 17, 2026)

Asset / Benchmark	Current Level	1 Month Ago	3 Months Ago	1 Year Ago
S&P 500	7,786	7,448	7,376	6,477
Dow Jones Industrial Average	53,732.4	52,426.5	49,696.5	45,159.9
Nasdaq Composite	26,729	25,412	25,923	21,709
WTI Crude Oil	$82.80/bbl	$78.86/bbl	$92.47/bbl	$61.30/bbl
Gold	$4,398.40/oz	$3,978.86/oz	$4,571.16/oz	$3,337.02/oz
Silver	$65.67/oz	$55.52/oz	$77.72/oz	$38.03/oz
10-Year U.S. Treasury Yield	4.69%	4.55%	4.67%	4.32%
30-Year U.S. Treasury Yield	5.26%	5.21%	5.08%	4.85%
U.S. Headline CPI (YoY)	3.40%	3.50%	3.80%	2.70%
U.S. Core CPI (YoY)	2.50%	2.60%	2.90%	2.60%
U.S. Producer Price Index (YoY)	4.70%	5.50%	6.50%	3.10%
U.S. Unemployment Rate	4.10%	4.20%	4.20%	4.30%

3. Treasury Yields & Fixed Income Analysis

Disinflation data caused short-term yields to decline, while long-end rates remained firm due to auction execution and supply dynamics:

Yield Curve Disconnect: The 2-year Treasury yield dropped 7 bps on the week to 4.17% (down to 4.14% mid-week). In contrast, the 10-year yield closed at 4.69% and the 30-year yield rose to 5.26%.
Curve Steepening: The 2s/10s spread widened to +0.53% (+53 bps), and the 5s/30s spread expanded to +0.91% (+91 bps).
30-Year Auction: The U.S. Treasury's $25BN 30-year bond auction cleared at 5.22%, marking the highest clearing yield for a 30-year auction since 2001.

4. Federal Reserve Policy & Market Expectations

Following soft inflation data, rate swaps reduced the probability of a 25 bp hike at the September 16 meeting to 31.8% (down from 60% earlier this month). Money markets are no longer pricing a full rate hike in 2026.

Implied Fed Funds Rates & Schedule

Current Effective Overnight Rate: 3.631%
September 16, 2026 Meeting: 3.711% (Implied Change: +0.08%)
October 28, 2026 Meeting: 3.76% (Implied Change: +0.13%)
December 9, 2026 Meeting (Year-End): 3.863% (Implied Change: +0.23%)
June 9, 2027 Meeting (Mid-Year 2027): 4.003%
December 8, 2027 Meeting (Year-End 2027): 3.979%

5. Economic Calendar

This Week

Monday, August 17: Empire State Manufacturing
Tuesday, August 18: Housing Starts; Industrial Production
Wednesday, August 19: MBA Mortgage Applications; FOMC Meeting Minutes
Thursday, August 20: Initial Jobless Claims
Friday, August 21: S&P Global U.S. Manufacturing PMI; S&P Global U.S. Services PMI

Next Week

August 24 – 28: New Home Sales; Consumer Confidence; PCE Deflator; Personal Income & Spending; Q2 GDP (Revision); 5-Year & 7-Year U.S. Treasury Auctions; U. of Mich. Sentiment.