August was a month of loud headlines and quiet markets. The Strait of Hormuz stayed at the center of the global risk equation, Brent held near USD 92, and the Fed, the ECB and the BoJ all maintained their positions. Yet equities ground higher, credit barely moved, and volatility stayed contained. Anyone reading the front page of a newspaper and then looking at a stock price screen would have found it hard to reconcile the two.

The gap between the two is largely explained by profits. Company results have been strong enough to carry the market on their own, which changes how the current valuation debate should be read.

Two things did move amid the calm. Gold and long-dated US yields rose together, an unusual pairing that says something about confidence in the borrower rather than the growth outlook. Expectations for interest rates have flipped from cuts to hikes on both sides of the Atlantic, which brings the question of where this inflation is actually coming from back to the center of the discussion.

We hope you enjoy the read.