Economic Update 9-8-2026

Economic data included the employment situation report showing stronger payroll growth than expected, as well as gains in job openings and ISM services, which offset a decline in ISM manufacturing.

Equities were flattish on the week in the U.S., coupled with mixed results in foreign markets. Bonds were down for the most part, as yields rose for a variety of reasons. Commodities gained, along with another spike in the price of crude oil.

 U.S. stocks ended flattish on net in the pre-holiday last week of summer. By sector, gains in energy (along with a rise in oil prices) as well as utilities and technology (led by Nvidia, buying AI platform Hugging Face) were offset by declines in consumer discretionary, materials, industrials, and consumer staples. Real estate also pulled back as yields rose.

The week started on a negative note due to several back-and-forth military strikes between the U.S. and Iran the prior weekend, the first meaningful exchanges in several weeks. Additionally, the U.S. and Canada continue to spar around trade and tariff terms. Both ongoing issues tie into market assumptions of continuing inflation and ultimately higher interest rates, which have been weighing on sentiment in the background for several weeks. Fed Governor Waller’s comments mid-week that “we are finally seeing some signs of disinflation” and implying he’d be fine with holding policy rates steady helped sentiment a bit, although a strong Friday jobs report offset a bit of that pointing to signs of a rate hike again. On the other hand, the President threatened to stop trade with countries with a U.S. trade deficit unless the Fed cuts, which added more complexity into the assessment.

Foreign stocks were mixed last week, with gains of over a percent in Japan, at least in U.S. dollar terms, and emerging markets offset by declines in Europe. Within EM, gains in Brazil, as economic growth came in stronger than expected, along with strength in technology-oriented South Korea and Taiwan being the standouts.

Bonds pulled back as yields again rose, not helped by commodity prices fueling fears of sustained inflation, as well as interpretations of Fed Chair Warsh’s comments leading to higher odds of a Sept. Fed hike. Floating rate bank loans were the sole exception, seeing gains. Unhedged local foreign bonds benefitted from a weaker U.S. dollar.

Commodities fared well overall last week, with strong gains in energy, while smaller gains in industrial metals offset small declines in agriculture and precious metals. Crude oil prices rose just under 10% again last week to $91/barrel, due to ramped-up military activity in the Middle East between the U.S. and Iran, as well as missile/drone fire upon Kuwait and Israeli threats against Iranian infrastructure.

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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.