Please see below the daily update article from Brooks Macdonald, received this morning – 21/08/2026:
What has happened?
Global bond markets came under renewed pressure yesterday as Wednesday’s rally, triggered by the US Treasury’s plans to expand its buyback operations, quickly faded. US 10-year Treasury yields rose +5.8bps to 4.71%, while a further rise in oil prices added to inflation concerns. Brent crude climbed +2.4% to $93.78/bbl, extending its winning streak to five sessions. The combination of higher yields and rising energy prices weighed on sentiment, with the S&P 500 falling -0.9%, its largest decline of August so far. European markets also softened. French 10-year government bond yields reached a fresh post-2008 high, while UK gilt yields moved higher following stronger-than-expected CBI survey data. Equity performance was mixed, with modest declines across most major continental European indices, while the FTSE 100 edged slightly higher.
Markets seek reassurance but yields edged higher
Treasury yields rose despite efforts from US Treasury Secretary Scott Bessent to reassure markets. Speaking to CNBC, Bessent suggested that Treasury buybacks could be expanded and said policymakers still had a broad toolkit to support market functioning. He also indicated that greater emphasis would soon be placed on fiscal consolidation, although few details were provided. Despite some stabilisation later in the day, Treasury yields ultimately reversed most of Wednesday’s decline.
Oil surge fuels inflation concerns
Geopolitical tensions in the Middle East remained a key market focus, helping to push Brent crude above $93/bbl. The move higher in oil prices drove a sharp rise in inflation expectations, with the US one-year inflation swap recording its largest daily increase since March. Markets consequently nudged up expectations for further Federal Reserve tightening this year. Comments from St. Louis Fed President Musalem also reinforced the view that inflation remains elevated and that underlying demand pressures persist.
What does Brooks Macdonald think?
Importantly, yesterday’s economic data offered little evidence that higher yields are beginning to meaningfully slow the US economy. The Philadelphia Fed Business Outlook rose to its strongest level since 2021, while the survey’s capital expenditure expectations reached levels not seen for decades. Initial jobless claims also remained low, pointing to a labour market that continues to show resilience. Taken together, the combination of firm growth data, a stable labour market and rising energy prices helps explain why bond markets remain reluctant to price in a more benign inflation outlook.
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Cherise Lancaster
21/08/2026