F.N.B. Wealth Management Fast Five

1. What happened in markets during August?

U.S. stocks successfully navigated a bond market sell-off, signs of weakness from the American consumer and evolving artificial intelligence (AI) trade to finish in positive territory for August. Here is how the broader financial markets did:

• The U.S. stock market rebounded after another blockbuster Nvidia report at the end of the second-quarter earnings season that revived the AI narrative and boosted overall market sentiment.
• The U.S. government bond yield curve flattened as rate hike expectation picked up, following a hawkish speech by Federal Reserve (Fed) Chair Warsh at the annual Jackson Hole symposium and a surprise announcement from the U.S. Treasury Department to ramp up longer-dated bond buybacks (see item No. 2).
• The momentum in technology names resumed amid the strong earnings backdrop, after July’s sharp sell-off. Energy and technology companies reported the strongest earnings per share (EPS) growth figures, but earnings were exceptional across the board. In fact, the 2026 global EPS growth estimate subsequently rose to a staggering 34% year-over-year (y/y).
• While the S&P500 returned 2.7% during the month of August, there were also broad-based gains among developed markets MSCI EAFE (+1.8%) and emerging markets MSCI EM (+4.8%). Small cap companies, as measured by the Russell 2000, were +1% for the month.
• The stock market rise coincided with a broad-based increase in commodity prices. Precious and industrial metals were up notably, with silver +16% m/m and gold +10% m/m, while the broad-based Bloomberg Commodity Index finished +7% m/m. West Texas Intermediate (WTI) crude oil averaged $82/barrel for the month of August.
• Despite elevated long-term yields, most bond indices reported gains with the U.S. Aggregate Bond Index returning 0.4% m/m. Nevertheless, global bond yields remain sensitive to fluctuations in energy prices and central bank rhetoric, with 10-year yields reaching fresh cycle highs in several parts of the world. Despite this, U.S. corporate bonds continue to outperform as spreads narrowed.
• The U.S. dollar weakened further in August relative to other currencies, with the U.S. Dollar Index (DXY) ending the month at 99.43. The dollar corrected suddenly when the Treasury announced the buybacks, but it resumed its decline at the end of the month as part of the “debasement trade.”

2. Were there any policy decisions in August that affected markets?

Although there wasn’t an official Fed meeting in August, there was the annual economic summit in Jackson Hole and not to be outdone, the Treasury jumped in with a fiscal policy announcement.

• In late August, Treasury Secretary Scott Bessent announced that the department will be increasing the size of its buybacks of long-dated securities “by at least double.” That means September’s planned buybacks could be more than $4 billion.
• This is reminiscent of “Operation Twist,” which was first introduced by the Federal Open Market Committee (FOMC) in 1961 and used again in 2008-09. Essentially, the strategy is to issue short-term debt to buy long-term debt and to at least contain long-term yields if not push them lower. This is important because the 30-year Treasury has been trading at its highest levels since 2007.
• Of course, what was positioned as a way to provide liquidity at the long-end of the Treasury maturity curve turned into a discussion of dollar debasement, which drove the dollar to a three-month low in August and pushed dollar alternatives like gold and crypto currencies higher.
• From a monetary policy perspective, the Fed’s annual economic summit in Jackson Hole, Wyoming, took center stage. During his much-anticipated speech, Chaiman Kevin Warsh helped to change some of the market criticisms of his leadership style when he made the following definitive quote: “Here is my standard: We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do. That’s our job…our mandate…and our charge to keep”.
• His firm and hawkish-leaning tone was further strengthened by his comments on what tools may be used to constrain inflation, as he said, “unconventional policies to spur economic activity may suit genuine crisis but should otherwise be used sparingly, if at all.”

3. Were long-term interest rates only a problem for the U.S.?

The short answer is no. Longer-term interest rates moving higher in August were not just a U.S. phenomenon. Governments around the world faced increased selling (higher yields) in their longer-dated bonds. The increase in long-term yields typically means higher borrowing costs for businesses and consumers.

• As of the end of August, the Bloomberg Global Treasury Index yield rose to its highest level since 2008, at 3.72%.
• Japan’s 10-year government bonds crossed 3% for the first time since 1996, while Australian 10-year yields are sitting at their highest levels since 2011.
• Higher government yields in the U.S. and around the world do have the potential to slow business and consumer activity as their cost of borrowing goes up with debt instruments tied to government yields (i.e. U.S. mortgage rates based of the Treasury yields).
• Governments are also facing competition from new investment grade bond issuance that is currently at $1.46 trillion or 8.5% higher than the first eight months of 2020, which was a pandemic-fueled record setting year for debt issuance. Globally, investment grade new issuance is close to $5 trillion. August 2026 outpaced August 2020, coming in at $145.2 billion in new issuance.

4. What were the key economic data points reported in August?

Despite it being the dog days of summer, August was a busy month for economic data releases. Here are a couple that caught our attention:

• The U.S. Leading Indicator Index increased 0.2% m/m in July, which was above consensus estimates. Improvements were seen in better jobless claims, building permits, interest rate spreads and the leading credit index. Average consumer expectations, however, were a detractor at -0.19% m/m.
• Pending home sales decreased -2.3% m/m in July with an index reading of 71.2, the lowest since January, which also matches the worst level since 2001. Most of this decline is likely due to higher mortgage rates.
  • The average age of first-time home buyers in the U.S. has risen to 40. This is the oldest age on record, going back to 1981.
• The National Federation of Independent Business (NFIB) Small Business Optimism Index picked up 2.4 points, coming in at 99.8 (the highest since last August), as the net share of businesses that said they are planning on adding jobs jumped to the highest level since October 2022.
• The Conference Board’s Consumer Confidence Index dropped to its lowest level since the beginning of the year at 89.4 in August. A bright spot in the report was the “present conditions” section rising to a four-month high, supported by respondents saying that jobs were slightly easier to get in August.

5. What is the Chief Investment Office monitoring in September?

It doesn’t look like financial markets are going to take a vacation from potential volatility this September. Here is what we are watching:

1. September is historically the worst performing month for equities, as markets tend to churn post-Labor Day as the third quarter ends. This is particularly true in a midterm election cycle. We will be watching to see if this September follows the historical trends.
2. The Federal Reserve meeting is being held September 15 and 16. Current market expectations are for a rate hike at that meeting.
3. President Trump and China’s President Xi Jinping are schedule to meet in late-September in Washington, D.C. The two will be discussing the current trade truce between the two nations.

Charts of the Month

Watching U.S. Employment Data

Heading into the September Fed meeting, it is clear their dual mandate is skewing towards inflation as current unemployment data does not suggest there is significant labor market stress (July’s unemployment rate was 4.1%). Furthermore, the weekly data that our CIO Office tracks (initial and continuing unemployment claims) are also near historically low levels. However, what our team will be looking for in the August nonfarm payrolls report is the number of jobs added or subtracted from the U.S. economy. From March 2020 to December 2024, the average monthly job gains were 103,845. Since then, the average has been 28,526. At a 4.1% unemployment rate, this suggests the overall size of the U.S. labor market may have constricted to a point where there are fewer jobs needed to stay near “full employment.” The August data could support a resetting of expectations.

U.S. Employment Data Since 2002

U.S. Manufacturing Is Having a Strong 2026

Manufacturing in the U.S., as measured by the Institute for Supply Management (ISM) Manufacturing Index, has expanded for eight straight months through August. In fact, the August reading came in at 54.2, which was the second-highest mark since 2022. A reading greater than 50 shows expansion. More importantly, the employment section of the index had back-to-back monthly gains for the first time since 2022, and the production measure hit the second-highest reading since late 2021 — 83% of industries reported within the index showed growth in August. 2025 tax law changes have helped to spur additional activity this year. The accompanying map shows the active U.S. manufacturing facilities within the Bloomberg database. The 2026 growth in manufacturing is good news for such a critical part of the U.S. economy.