Economic Update 8-17-2026

Economic data included consumer price inflation that ticked a bit higher, but showed a more promising trend of deceleration, while producer price inflation came in flat, and a bit of a surprise. Retail sales and existing home sales both fell, with the former due to a return to normal from an early high-profile discount day.

Equities were positive globally, as some easing in inflation was pared with decent earnings and economic results. Bonds were little-changed for the week domestically, while a stronger dollar held back unhedged foreign bonds. Commodities gained, based on higher energy and agricultural prices.

U.S. stocks lagged in the first part of the week before recovering by Friday, as favorable inflation news was taken positively. By sector, energy stocks gained over 7% with another rise in oil prices, followed by utilities, with a variety of sectors rising about a percent for the week. Consumer discretionary stocks and communications were the only laggards, down -2% and -1%, respectively with the former due to weakness in Amazon. Real estate saw a slight gain as well.

Foreign stocks were mixed, with gains in Japan and Europe offset by a decline in the U.K. Japanese tech exports fared positively with a weaker yen, and economic conditions in Europe have continued to plug along slowly, while earnings have fared better, in the double-digits, while U.K. sentiment has been mixed as the new administration is facing still-high inflation and interest rates, fiscal policy constraints, and potential tax hikes to close the gap. Emerging markets fared positively, led again by gains in South Korea especially, which have been tied to AI and technology sentiment more than other countries in the space, and offset declines in Brazil, China, and India.

Bonds were mixed with little change across the U.S. Treasury yield curve, with short-term rates falling slightly along with reduced chances of a near-term Fed hike, coupled with a small rise in long-term rates. Floating rate bank loans and high yield bonds outperformed other groups. International bonds lagged, along with a stronger U.S. dollar.

Commodities gained, due to strength in energy and agriculture (wheat and corn). Crude oil rose over 5% last week to $82/barrel, as Middle East tensions continued at the Strait of Hormuz, with no immediate signs of resolution. The trading range has evolved to a tighter band of roughly $70-90 more recently.

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Sources:  LSA Portfolio Analytics, American Association for Individual Investors (AAII), Associated Press, Barclays Capital, Bloomberg, Deutsche Bank, FactSet, Financial Times, Goldman Sachs, JPMorgan Asset Management, Kiplinger’s, Marketfield Asset Management, Minyanville, Morgan Stanley, MSCI, Morningstar, Northern Trust, Oppenheimer Funds, Payden & Rygel, PIMCO, Rafferty Capital Markets, LLC, Schroder’s, Standard & Poor’s, The Conference Board, Thomson Reuters, U.S. Bureau of Economic Analysis, U.S. Federal Reserve, Wells Capital Management, Yahoo!, Zacks Investment Research.  Index performance is shown as total return, which includes dividends, with the exception of MSCI-EM, which is quoted as price return/excluding dividends.  Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.

The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness.  All information and opinions expressed are subject to change without notice.  Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.