Market developments
Equities: Global equities posted broad gains on the week, led by technology and emerging markets. The Nasdaq rose, propelled by Nvidia’s blockbuster earnings and outlook that reinvigorated confidence in the AI trade. Early in the week, uncertainty around US plans regarding Iran briefly dampened sentiment before the Treasury Department announced a broad sanctions campaign targeting Iranian aviation, shipping, technology and financial sectors.
Fixed Income: The dominant theme in fixed income was the Jackson Hole symposium, where Fed Chair Warsh delivered a hawkish message on Friday, warning that inflation is not meaningfully slowing and that the Fed has “work to do”, pushing the probability of a September rate hike to approximately 60%. The front end of the U.S. Treasury curve bore the brunt of the move, with the 2-year yield rising more than the long end of the curve.
Commodities: Commodities were broadly weaker on the week, with energy and precious metals leading the declines. Brent crude fell. Gold was the week’s standout loser, falling approximately 4% from, hit by a combination of dollar strength, rising real yields following Warsh’s speech and the fact that U.S. Iran sanctions specifically targeted gold flows.