Morning Brew August 19 2026

Good morning.          

Fears of an extended Middle East crisis and high AI investment costs are pushing the long end of the yield curve to uncomfortable -decade record -  highs.

Japan’s 10-year government bond yield jumped to a three-decade high on Monday. Germany’s 10-year Bund yield rose one basis point to 3.21% after touching 3.2158%, the highest level since May 2011. France’s 10-year government bond yield rose 1.5 basis points to 4.05% after reaching 4.0581%, the highest level since June 2009. Money markets now price the ECB deposit rate at 2.76% in March 2027, up from the current 2.25%. Attention now turns to the Jackson Hole symposium late next week

The euro is trading around 1.1576 and the yen around 159.44 per dollar, close to the 160 level that investors continue to watch as a potential trigger for another round of official intervention. A weaker Swiss franc could be an unexpected consequence of recent U.S.-Japanese intervention to support the yen, bringing some relief to Swiss companies and policymakers after years of franc strength. Gold and silver are under pressure from higher yields, trading around 4,330 and 62.65, while bitcoin is stable near 64,200.

Global equity funds attracted inflows for a 12th consecutive week through 12 August, supported by optimism around the earnings season and data showing weaker-than-expected U.S. payroll growth and easing inflation. The data helped reduce expectations for another Federal Reserve rate hike.

The US 500 is at 7685, the US Tech 100 29385, US 30 53300 and the Switzerland 20 14,300

In China, shares of humanoid-robot maker Unitree soared 600% on debut after a listing that was more than 8,000 times oversubscribed by retail investors.

Home Depot beat second-quarter sales and profit estimates on Tuesday, helped by steady demand for repair and maintenance. The report came as U.S. data showed homebuilding fell sharply in July, hit by rising mortgage rates.

Meta Platforms rejected accusations by U.S. states that it intentionally sought to addict children to Facebook and Instagram for profit as a trial began that could reshape some of the world’s most widely used apps. Meta says potential penalties could reach USD 1.4 trillion, while the states argue that around USD 200 billion is more likely.

U.S. President Donald Trump said on Tuesday that no talks were taking place with Iran and insisted the Strait of Hormuz was open, contradicting Iran’s assertion that the critical waterway remained shut to shipping.

The reduced prospects of a deal to end the nearly six-month conflict pushed oil prices higher again. Stock markets weakened and borrowing costs for major economies, including the U.S., rose to multi-decade highs amid concerns about the long-term inflation and fiscal impact of the crisis.

President Donald Trump announced a three-day pause on new 50% tariffs that were due to take effect on Canadian goods at midnight, saying the two countries had reached a deal,  Mark Carney said in a statement that “substantial progress has been made, although there is important work still to be done.”

Markets are also waiting for a speech by ECB President Christine Lagarde at a World Economic Forum event. Speaking at the International Business Council in Geneva, Lagarde is expected to address the global economic outlook.

The World Robot Conference is starting in Beijing, with the economic value of robotics in focus.

Trade carefully. At one point high inflation should drive hard asset prices higher but we may well see a yield shock before that.

Wednesday, 19 August 2026
Macro: UK CPI  EI HICP FOMC minutes from the July meeting.
Central banks / speakers: FOMC minutes released at 20:00 CET.
Corporate earnings: Target and selected U.S. retailers.
Thursday, 20 August 2026
Macro: Japan  Trade Balance U.S. initial jobless claims; Philadelphia Fed survey; Leading Economic Index.
Central banks / speakers: Fed balance sheet after the close

Corporate earnings: Walmart
Friday, 21 August 2026
Macro: Japan CPI , UK Retail Sales Flash S&P Global manufacturing and services PMIs for the U.S., euro area and UK.