August closed on a positive note for fixed income, with U.S. Treasuries averaging a +1.5% gain, as markets reacted to a moderating job market and the prospect of the Fed's anticipated rate cuts.

August was a volatile month with US equities pulling back at the start the month before rallying back to unchanged. Last week, the main US equity indices ended mixed. Trading was light ahead of the US holiday weekend (Labor Day). The Nasdaq Composite fared the worst, dragged lower in part by chip giant NVIDIA, which lost nearly 10% of its value, at the stock’s low point on Thursday. Relatedly, value stocks outperformed growth shares by the largest margin since late July. The US core personal consumption expenditures (PCE) price index showed prices rising by 0.2% in July, largely as expected. This seemed to please investors as it is a confirmation that inflation was remaining subdued and near the Fed’s target.

Gold prices are hitting record highs, US Job Growth Slashed by 818,000, and the S&P 500’s value relative to gold mirrors 1971 levels. Each week, the Syz investment team takes you through the last seven days in seven charts.

The bond market surged this week, driven by growing expectations of an imminent rate cut from the Federal Reserve. With yields dropping across the curve, investors are positioning for a more accommodative monetary policy as the Fed shifts its focus towards stabilizing growth and managing a cooling job market

The Dow Jones and S&P 500 Index moved back toward record highs this week, as investors appeared to celebrate Fed Powell’s announcement at Jackson Hall that interest rate cuts would soon be coming. The gains were also broad-based, with small-caps outperforming large-caps and an equal-weighted version of the S&P 500 Index outpacing its capitalization-weighted counterpart. However, trading activity was exceptionally light through most of the week. On Friday, stocks jumped at the open of trading following the release of the text of Powell's speech at Jackson Hole, in which he acknowledged that “the time has come for policy to adjust”—implying that policymakers would cut rates in September. Moreover, Powell appeared to leave room for a cut of 50 basis (instead of 25 basis points).

The Fed's monetary policy is increasingly restrictive. Kamala Harris has a 53% chance of winning the 2024 US election, and US oil production has risen 22% over four years, a 250% increase since 2008. Each week, the Syz investment team takes you through the last seven days in seven charts.

After months where inflation dominated market movements, bond markets now seem less reactive to inflation data, turning their attention instead to labor market trends, upcoming elections, and geopolitical uncertainties. This shift could indicate a broader rebalancing of market drivers in the months ahead.

US equities recorded their best week since 2023, led by a 5%-plus surge in the Nasdaq (which is up 12% from last Monday's lows). Investors appeared to celebrate positive news on both the inflation and growth fronts, which are bolstering hopes that the economy might achieve a “soft landing.” AI chip giant NVIDIA was especially strong, gaining 19% over the week. Growth stocks handily outpaced value shares. Small Caps were lifted by an ongoing short-squeeze. Official economic data suggested that the consumer was holding strong in the face of the cooling labor market. On Thursday, the Commerce Department reported that retail sales surged 1.0% in July, their best showing in 18 months. Consumer price index (CPI) inflation, reported Wednesday, was in line with expectations but also seemed to reassure investors, as the yoy increase in CPI fell below 3.0% for the first time in three years. The US 10-year Treasury yield decreased through most of the week on the benign inflation data but jumped on Thursday following the strong retail sales data. Credit markets rallied hard this week, adjusting back from "hard landing" to "soft landing" scenarios.

After a weaker-than-expected U.S. jobs report earlier this month, Japan's market crisis initially boosted bonds, suggesting a return to safety. However, yields corrected later in the week as reassuring news from Japan and a rebound in equities tempered the bond rally.

The week began in total chaos on Japanese markets as the ‘yen carry trade’ unwound, triggering a sharp rise in US equity volatility. Each week, the Syz investment team takes you through the last seven days in seven charts.