Monthly Market Radar: The Market Wants Receipts

For the period covering August 1, 2026, through August 31, 2026.

For the last few years, investors were willing to reward potential. Today, they’re asking tougher questions. Whether it’s the economy, inflation, AI, or corporate earnings, markets increasingly want proof that expectations are translating into real results.

Global Perspective

The Economy Keeps Surprising Everyone

Two years ago, most economists figured higher interest rates would finally slow things down, but it hasn’t really happened. Despite the fact that U.S. growth cooled to about 1.5% during the second quarter, third quarter growth estimates show surprisingly strong expectations for improvement, as consumers continue to spend and businesses continue to invest. Other countries are a mixed bag, but nobody’s economy has fallen off a cliff. Growth isn’t exactly booming anymore, but it’s holding up better than almost anyone expected.

Inflation Is Getting Trickier, Not Worse

Inflation is still heading in the right direction, but the road there has gotten bumpier. Energy prices can swing fast depending on what’s happening in the Middle East, and things like housing, services, and wages keep popping up as sticking points. Prices aren’t rising everywhere again. It’s just that progress looks different from one place to the next, and that makes it harder for investors and central banks to relax.

Image

Higher Rates Might Be Sticking Around

Here’s the big shift this year: rates may stay higher for longer than anyone planned for. And it’s not just an American story. Bond yields have climbed across major economies as investors grapple with sticky inflation, growing government debt, and the chance that central banks aren’t quite done fighting inflation yet. Basically, the world is waking up from the super-low-rate era that defined the last decade.

The Fed Isn’t Giving Away Its Playbook

Markets are also adjusting to a different Fed under Chair Kevin Warsh. Instead of telling everyone what’s coming months ahead, the Fed is playing it closer to the vest and reacting to the data as it comes in. Which means every jobs report, inflation number, and wage update can move markets more than they used to.

Why It All Matters

The economy continues to hold up, which is generally good news for companies and investors. But that same resilience could keep inflation from falling as quickly as hoped and give the Fed less reason to lower rates anytime soon. Higher rates are creating better income opportunities in bonds and cash, however a less predictable Fed means markets may continue reacting sharply to every new economic report. For investors, that’s a reminder to stay focused on long-term goals instead of making big portfolio changes based on a single data point or rate forecast.

Equities

Investors Want More Than Good Stories Alone

Earnings are still strong, and that’s keeping the market propped up. But investors have gotten choosy about where they put their money. Having a great story or big promises about the future just doesn’t cut it anymore. Companies that actually deliver are getting rewarded, and companies that miss the mark are getting punished fast. That’s why we’re seeing some stocks soar and others sink, even in the same industry.

AI Has to Start Paying Off

AI is still driving a lot of what happens in the market, but the questions are changing. For the last couple of years, just being tied to AI was enough to boost a stock. Now people want proof. Is all that spending actually making money? Is it boosting productivity? Are profits showing up? The opportunity is still huge, but investors care a lot more about results than announcements these days.

Chipmakers Catch Their Breath

Semiconductor companies are still at the center of the AI boom, but they’ve largely pulled back after an incredible run. Investors are watching competition heat up, especially in memory chips, and wondering if demand can really live up to the hype. This dip doesn’t mean the long-term AI buildout is broken. It just means people are paying closer attention to price tags and growth assumptions again.

Shoppers Keep Showing Up

Despite inflation and higher borrowing costs, people are still spending. Travel, restaurants, and retail have held up better than expected. Which is important because consumer spending drives a huge chunk of the economy. And as long as people keep opening their wallets, it gives both the economy and company earnings some real cushion.

It’s Not Just the Big Names Anymore

One bright spot this year: more companies are joining the rally, not just the market heavyweights. Smaller companies have actually outperformed many large-cap stocks, thanks to stronger earnings, more mergers, and growing roles in AI supply chains. Overseas, South Korea and its semiconductor companies have driven a lot of the strength in emerging markets, showing that AI’s reach is going global. That’s a good sign for the market overall, but a lot of these winners are still riding the same wave.

Earnings Are Setting the Pace

At the end of the day, earnings move stock prices, plain and simple. Companies are posting some of the best profit growth we’ve seen in years, and that’s helping justify prices even with rates staying high. It’s a big reason markets have stayed steady despite worries about inflation, rates, and world events. Going forward, earnings should tell us more than any headline will.

Image

Why It All Matters

A rising market can hide weakness underneath, so the quality of the businesses investors own, and the prices paid for them, still matter. Strong earnings and steady consumer spending are supporting stocks, but those profits need to keep pace with already-high expectations. Many portfolios also have significant exposure to AI and chipmakers through diversified stock funds. It’s encouraging that more companies are joining the rally, but if many of those new winners still depend on the same AI spending cycle, a portfolio may be less diversified than it looks. We think investors should focus on companies turning AI and other growth investments into real profits, not simply those making the biggest promises.

Fixed Income

The Bond Market Is Shifting to a New Rate Reality

Everyone expected rates to fall this year. Instead, they went up. Stronger growth, stubborn inflation, and a more cautious Fed pushed yields higher across the board. As a result, investors are no longer asking when cuts are coming. They’re asking how long rates might stay elevated, and whether the Fed is really done raising them.

Income Is Finally Back

There’s no doubt that rates have caused some bumpy pricing, but they’ve also brought back something investors haven’t seen in years: real income. Investors can now earn solid yields from high-quality bonds without taking on a ton of risk. That’s a big change from the last decade of rock-bottom rates, and it’s why bonds are playing a bigger role in portfolios again.

Solid Companies, More Competition

Corporate balance sheets still look healthy, and credit markets show confidence that most businesses can handle slower growth. But investors have more choices now too. Big, well-rated companies, including several major tech firms, have been issuing a lot of new debt, creating more competition for investor dollars. While that’s kept spreads tight, meaning bond prices leave little room for disappointment, it also makes bond selection more important than ever.

Munis, Treasuries, and the Deficit Question

Municipal bonds still draw investors looking for tax-friendly income, though strong demand has pushed prices up in much of the market. Meanwhile, people are paying closer attention to the government’s growing debt and borrowing needs. More Treasury issuance, talk of policy fixes, and ongoing worries about long-term finances are all shaping where longer-term rates go from here. For bond investors, it’s not just about the Fed anymore. It’s also about how much debt the government issues, and who’s actually willing to buy it.

Why It All Matters

Bonds are doing what they’re supposed to do. Higher yields are providing meaningful income again, and investors don’t have to take excessive risk to earn it. But shifting rate expectations, heavy government borrowing, and high prices in parts of the corporate and municipal bond markets mean not all bonds offer the same value. We think investors should focus on quality, price, taxes, and choosing bond maturities that line up with when they’ll need the money, rather than simply chasing the highest yield.

Looking Ahead

Inflation Is Still Driving the Bus

A lot of market storylines have come and gone these last few years, but inflation is the one thread that ties it all together. It shapes interest rates, Fed decisions, borrowing costs, and how investors value stocks and bonds. The overall trend is still improving, but progress isn’t even, and energy prices remain a wild card. The good news? Wage growth has cooled, and pressure has eased in several areas. The hard part? Getting from “better” to the Fed’s 2% goal may be tougher than getting from “bad” to “better” ever was.

AI Needs to Prove It, Not Just Promise It

AI isn’t going anywhere, but investors are asking harder questions than they were a year ago. Early on, just spending money on AI infrastructure and data centers was enough to impress people. Now the focus is shifting to results. Investors want to know who’s actually boosting productivity, generating new revenue, and building a real edge over competitors. The next chapter of the AI saga will expand beyond the infrastructure stage as investors look for how AI will benefit most companies and consumers.

More Companies Are Joining In, But AI Still Ties It Together

One of the healthier trends this year: market leadership is spreading out. Small-cap stocks, some international markets, and sectors outside of Big Tech have all contributed more to returns. That’s generally a good thing, because it means the market isn’t leaning on just a handful of companies. That said, a lot of this newer strength still traces back to AI, whether that’s chipmakers, suppliers, data centers, or infrastructure companies. The players are more varied, but the theme underneath is still pretty much the same.

Get Ready for More Than One Outcome

If 2026 has taught us anything, it’s that the economy and markets rarely move in a straight line. Growth held up better than expected. Inflation turned out messier than hoped. And rate expectations have flipped more than once. Going forward, investors need to weigh the upside from strong growth and new technology against the risks from inflation, rates, and world events. Our take? Don’t try to predict every twist. Build a portfolio that can handle whatever comes next.

Why It All Matters

We think investors should treat uncertainty as something they need to plan for, not something they need to solve. That means checking whether portfolios still match their goals, timelines, and comfort with risk, then rebalancing areas that have grown too large, protecting near-term spending needs, and making sure one popular trend isn’t quietly driving too much of the portfolio. The goal isn’t to predict what comes next. It’s to avoid letting one wrong forecast, crowded investment, or difficult stretch derail the larger plan.

This information is not intended as a recommendation. The opinions are subject to change at any time and no forecasts can be guaranteed. Investment decisions should always be made based on an investor’s specific circumstances. Investing involves risk, including possible loss of principal.

^2026-13886