Blog week ending, 14th August 2026
Markets:
- Equity markets were mixed this week, with US investors buoyed by better-behaved inflation data while Australian investors showed concern as banks reported a slump in loan applications.
- The US Treasury issued US$25 billion of 30-year bonds at a yield of 5.2%, the highest rate since 2001. Demand for the auction was solid, following a 10-year bond sale that recorded the highest yield since 2007.
- In local stock news, company reporting season began, with Origin shares jumping after its full-year profit beat expectations while Telstra announced a further $1 billion share buyback.
- Westpac shares fell despite reporting stronger quarterly earnings, after revealing third-quarter mortgage applications slumped by around 20% following May’s federal budget announcement.
- CBA delivered another record annual profit, supported by lending growth across its core business, while warning that cost-of-living pressures and global uncertainty are beginning to affect customer behaviour.
- ANZ Group said home loan applications had slumped 12% since the Labor government’s announcement of tax changes, as the bank reported $1.9 billion in cash earnings for the third quarter. Bad debt charges for the period came in lower than expected.
- Rio Tinto’s shares fell after the stock went ex-dividend despite the NSW and federal governments committing $2.5 billion over 10 years to keep its Tomago smelter online.
- Oil prices rose after Iran said the Strait of Hormuz would not reopen until Washington met its conditions, reviving inflation and Fed rate hike concerns. Attacks on two ships in the Strait also reinforced worries about disruptions to Middle East supplies, while the International Energy Agency flagged concerns over global oil inventories.
Economy:
- The RBA kept its cash rate unchanged at 4.35% in a unanimous decision at its August 2026 meeting, in line with market expectations. The statement noted that inflation remains too high and that financial conditions have tightened but left the door open for further rate increases if needed.
- Australian business confidence weakened amid uncertainty in the Middle East, with elevated cost pressures weighing on business margins.
- US Fed Chair Kevin Warsh signalled he remains prepared to hike rates in September if inflation runs hot, while he continued to maintain his preference for little to no forward guidance from the Fed.
- The US annual inflation rate slowed for a second consecutive month to 3.4% in July, from 3.5% in June, in line with expectations. Lower fuel and petrol prices, along with softer housing cost inflation, helped offset ongoing price pressures elsewhere, while food inflation remained unchanged.
- US July producer prices were unchanged on the month and eased to 4.7% from the same time last year, below the 4.9% expected, easing pressure on the Fed.
- The US economy unexpectedly shed 23,000 jobs in July, following a downwardly revised 20,000 gain in June and coming in well below expectations of an 80,000 increase. Employment figures for May were also revised lower. Only the healthcare sector added jobs in July.
- The US unemployment rate fell to 4.1% from 4.2% against estimates for it to remain steady. Private businesses in the US added 30,000 jobs in July, the same as the downwardly revised 30,000 in June and well below forecasts of 78,000.
- US existing home sales fell 1.7% in July to an annualised pace of 4.06 million, and reaching a three-month low, as elevated prices and mortgage rates weighed on the housing market. This follows a 1.4% decline in the previous month.
- US small business optimism jumped in July, reaching its highest level since August last year and coming in ahead of forecasts, with optimism up in eight of the ten categories. Hiring plans hit their highest level since October 2022.
- The UK economy grew 0.3% in June compared with zero growth in May and market expectations for no change. Services output remained the sole driver of overall growth. For the year, the economy expanded 1.1%.
- Germany’s annual inflation rate accelerated to 2.8% in July, up from 2.3% in June. It was the highest reading since April, driven by a sharp rise in energy inflation.
- China’s annual inflation rate eased to 0.5% in July from 1.0% in the previous month, falling short of market expectations of 0.8%. It was the lowest reading since January as food prices declined and non-food inflation slowed.
- China’s trade surplus widened to US$112.5 billion, beating estimates, though remaining below June’s surplus, as import growth of 27.5% outpaced the slowdown in exports.
Politics:
- Reports suggest, President Trump is privately signalling a willingness to end the Iran war without a formal nuclear deal if the Strait of Hormuz reopens. He has specifically indicated that he is prepared to let economic pressure build on Iran in the meantime. Iran says a deal to reopen the Strait is nearing, while Israel has reportedly rejected a US-backed 15-point plan aimed at disarming Hamas in Gaza.
- President Trump signed a new tariff imposing a 15% levy on critical elements used in the production of semiconductors and solar cells. He also touted a US$3 billion investment in US critical minerals, while also announcing grants for mining education programs.
This information is general advice and does not take account of investors’ objectives, financial situation or needs. Before acting on this general advice, investors should therefore consider the appropriateness of the advice having regard to their objectives, financial situation or needs.
Written by Christopher Lioutas
Chairman – Harbourside Investment Management
