The Profit Margin: August 24, 2026
Statistic of the Week
According to research from Goldman Sachs, artificial intelligence has reduced U.S. payroll growth by approximately 16,000 jobs per month, contributing to an unemployment rate roughly 0.1% higher than it otherwise would be. While AI has resulted in a net decline in employment, the study estimates that it has also added approximately 9,000 jobs per month in areas where the technology can augment, rather than replace, workers.
Global Perspective
Persistently high inflation is not confined to the U.S. The U.K. inflation rate increased to an annualized rate of 2.9% in July, driven largely by higher gas and electricity prices. The government’s energy price cap was raised in response to higher input costs, contributing to the increase in household energy prices.
Market Moving Events
Tuesday: New Home Sales, Consumer Confidence
Wednesday: Durable Goods Orders, GDP (revision), Personal Income and Spending, PCE Price Index
Thursday: Jobless Claims, Retail Inventories, Wholesale Inventories
Friday: Consumer Sentiment
Commentary
For seasoned investors, last week had the feel of the “summer doldrums.” Earnings season continued, with major retailers pointing to a generally healthy consumer. However, volatility in the technology sector, coupled with notable moves in the bond market, pushed equity prices lower. All three major U.S. equity averages finished the week in the red. The Nasdaq fared the worst, falling 2.06%, while the S&P 500 snapped a three-week winning streak, declining 1.43%.1 The DJIA held up the best, falling less than 1%.2 Fixed income yields moved higher, with the 10-year Treasury yield rising 0.04% to close Friday at 4.74%.3
For the first time in a long time, investors seemed more interested in the machinations of the bond market than the stock market. This came as total U.S. federal debt topped $40 trillion and long-term Treasury yields reached levels not seen in nearly two decades.4 The 30-year Treasury yield climbed to 5.31%, its highest level since 2007.5 On Wednesday, Treasury Secretary Bessent announced a program to purchase longer-term bonds in an effort to bring down longer-term borrowing costs. The strategy is reminiscent of the Federal Reserve’s 2011 “Operation Twist.” Bond investors, however, did not bite. Yields initially fell on the announcement but quickly reversed course. The continued pressure on long-term yields complicates the Federal Reserve’s job as policymakers convene at Jackson Hole this week, where Chair Warsh is scheduled to speak on Friday. His remarks will follow Wednesday’s release of the July PCE Price Index, providing investors with another important read on inflation and the path of monetary policy.
Chart of the Week
The Treasury yield curve as of Friday (dark blue) shows higher yields across nearly every maturity compared to where it stood at the end of last quarter (gold line) and a year ago (red line). Notably, the curve no longer has any inverted segments.
Source Materials
Market Moving Events:
MarketWatch.com
Chart of the Week:
Clearnomics,
Federal Reserve
Statistic of the Week:
Yahoo! Finance, Goldman Sachs
Global Perspective:
The Economist
Commentary:
1. Bloomberg, Investor’s Business Daily
2. Bloomberg
3. MarketWatch.com
4. MarketWatch.com
5. Barron’s
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