IGA WEEKLY MACRO REPORT

Joshua Hawley
23 minutes ago
3 min read

"The bond market set the tone and equities spent the week absorbing it. The S&P 500 fell 1.4%, snapping a three-week winning streak, as 30-year Treasury yields touched their highest levels since 2007 and oil resumed climbing due to failed diplomatic talks. Higher long-term borrowing costs pressured rate-sensitive tech valuations, dragging the Nasdaq down 2.1% (with the Nasdaq 100 carrying a five-session losing streak into the final day). The Dow held up comparatively well, declining 0.8%."

August 24, 2026

Corporate Highlights: Walmart dropped over 10% after a rare miss on US comparable sales, compounding concerns from the prior week’s retail contraction. Conversely, Home Depot, TJX, Target, and Ross posted broadly solid earnings. Moderna doubled alongside a 10% surge in Merck following successful joint melanoma vaccine trial results.
Midweek Reprieve Fades: Treasury's buyback announcement sparked an intraday rally—pushing the Dow up over 360 points at its high—before fading to a 0.2% gain as relief buyers evaporated within hours.
Alternative Assets & FX: Bitcoin surged 22% to $77,000 (its best week in two years) and Gold notched its fifth consecutive weekly gain as the US Dollar Index slid to a three-month low. This price action reflects diminishing market confidence in sovereign paper rather than a pure risk-on appetite.

Geopolitical & Energy Dynamics

Both key diplomatic tracks broke down over the week, with energy markets rapidly pricing in heightened supply disruption risks:

Iran & Geopolitics: The 60-day negotiating window expired with no scheduled talks. The US administration pivoted to economic attrition, promising "toughest in history" sanctions, fresh sanctions on Hezbollah, and the UAE suspending financial transactions with Tehran. Iran’s IRGC warned of devastating responses, while RBC estimates the conflict is removing ~8MM bpd from pre-war Hormuz flows (~20MM bpd). Brent crude rose 5% to $94.39/bbl, marking its highest close since late July.
Canada Trade Relations: A temporary 3-day tariff pause collapsed after negotiations were suspended over last-minute US term changes. 50% US tariffs took effect on ~$20BN of Canadian goods, with Ottawa promising dollar-for-dollar retaliation on $28BN of US goods starting September 8.

Treasury Yields & Debt Management

Treasuries completed a volatile round-trip, finishing the week nearly flat after reaching multi-year highs:

Maturity	Yield	Weekly Change / Note
2-Year Treasury	4.23%	Up 6 bps on rebuilt front-end rate hike premium
10-Year Treasury	4.73%	Rebounded from mid-week low of 4.65%
30-Year Treasury	5.27%	Touched 5.327% (highest since June 2007) before intervention

Treasury Buyback Analysis: Treasury announced plans to at least double buyback operations in 10-to-20 and 20-to-30 year maturities ($4BN+ running Sept 9 – Nov 4). While this provided a temporary 10 bps drop in 30-year yields, gains were erased within a day as oil climbed and hawkish FOMC minutes landed.
Structural Takeaway: The buyback reallocation does not eliminate the federal deficit funding problem; it shifts term premium into short-term bills. Effectively, Treasury is refinancing long-term obligations with short-term paper (swapping term premium for rollover risk). The NY Fed's 10-year ACM term premium is up over 40 bps from its post-June low, confirming that market yields are constrained by price demand rather than structural liquidity.

Federal Reserve & Monetary Policy

The July FOMC minutes revealed a significantly more hawkish stance than the 9-3 vote suggested, with many participants indicating that policy tightening would likely be necessary if inflation reaccelerates. Risks remain tilted to the upside due to tariff pass-through, energy costs, and AI infrastructure demand.

Policy Imbalance: Fed Chair Warsh appears content to let elevated long-end yields execute financial tightening, directly contrasting Treasury Secretary Bessent's efforts to actively suppress long-end yields through buybacks.
Market Pricing: Rate futures currently price a ~33% probability of a rate hike at the September 16 FOMC meeting, down from 44% post-payrolls. All eyes turn to Chair Warsh’s inaugural Jackson Hole keynote address on August 28.

Implied Overnight Rate: 3.631%
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• Sep 16, 2026 Meeting: 3.729%
• Dec 09, 2026 Meeting: 3.885%
• Jun 09, 2027 Meeting: 4.068%
• Dec 08, 2027 Meeting: 4.059%

Economic Calendar & Key Releases

This Week (Aug 24 – Aug 28):
- Mon 8/24: No major U.S. releases.
- Tue 8/25: S&P/Case-Shiller Home Price Index; New Home Sales; Consumer Confidence; 2-Yr Treasury Auction.
- Wed 8/26: MBA Mortgage Applications; Personal Income & Spending; PCE Deflator; Q2 GDP (2nd Estimate); Durable Goods; 5-Yr Treasury Auction.
- Thu 8/27: Jobless Claims; 7-Yr Treasury Auction; Jackson Hole Symposium Begins (Chair Warsh speaks).
- Fri 8/28: Chicago PMI; Univ. of Michigan Sentiment (Final).
Next Week:
- Dallas Fed Manufacturing; ISM Manufacturing; Construction Spending; JOLTS Job Openings; ADP Employment; ISM Services; Factory Orders; August Nonfarm Payrolls / Employment Report.