NEW YORK, August 14, 2026, 12:28 EDT — U.S. cash markets had opened for trading.
- The dollar index slipped 0.39% after retail sales in July declined 0.6%.
- Brent climbed 0.7% on Friday, on track for a weekly increase of 6%.
- Stocks fell, while the VIX remained close to 14.6.
The dollar weakened and short-term Treasury yields slipped on Friday after disappointing US retail sales lowered expectations for imminent Federal Reserve rate hikes. Oil prices rose instead, with Brent crude gaining almost 6% on the week, as stalled US-Iran negotiations sustained concerns over supply risks.
The division carries more significance than the slight drop in shares. Weaker demand benefits the shorter end of the bond curve. High oil prices maintain inflation and term-premium risks at longer maturities.
The S&P 500 slipped 0.18% to 7,784.91 by midday. The Dow shed 0.19% and the Nasdaq Composite retreated 0.43%. The declines came after the S&P closed at a record high on Thursday.
The downturn was broad but modest. The STOXX 600 in Europe slipped 0.24%. Asia-Pacific stocks outside Japan ended the session up 0.29%. The MSCI All-World index was heading for a third consecutive weekly advance.
| Asset | Latest level | Session move | Investor signal |
|---|---|---|---|
| S&P 500 | 7,784.91 | -0.18% | Trades close to record; growth concerns persist |
| Nasdaq Composite | 26,687.10 | -0.43% | High rates limit long-duration assets |
| STOXX 600 | — | -0.24% | European markets adopt cautious stance |
| Dollar index | 99.53 | -0.39% | Forecasts for Fed rates revised down |
| Brent crude | $87.68 | +0.70% | Supply fears sustain risk premium |
| Spot gold | $4,387.41 | +0.85% | Softer dollar boosts gold price |
| Bitcoin | $62,923 | -0.78% | Crypto underperformed vs. dollar |
| VIX | 14.66 | +0.21% | Appetite for hedging remains low |
Retail sales for July dropped by 0.6%, marking the first decrease in nine months. Economists had predicted a rise of 0.1%. The control group, a key contributor to GDP calculations, slid 0.4%, while analysts had anticipated a 0.3% gain.
| July US retail reading | Actual | Consensus | June |
|---|---|---|---|
| Total sales | -0.6% | +0.1% | +0.2% |
| Control category | -0.4% | +0.3% | +0.4% revised |
| E-commerce retailers | -2.2% | Not available | — |
| Food and beverage outlets | +0.5% | Not available | +0.4% |
The dollar index slipped to 99.53. The euro gained 0.47% to reach $1.1581. The yen appreciated to 159.09 against the dollar after Reuters reported the Bank of Japan may hike rates in September.
Bonds reflected more caution. The yield on the two-year Treasury slipped closer to 4.14%, while the 10-year yield remained around 4.66%. The approximately 52-basis-point spread marked the most prominent cross-asset signal of the session.
| Rates and policy measure | Latest | Earlier reference | Interpretation |
|---|---|---|---|
| US two-year yield | About 4.14% | Higher before weak sales | September rate increase risk lower |
| US 10-year yield | About 4.66% | 4.63% in last weekly figure | Oil prices and term premium stay elevated |
| September Fed hike probability | 31% | 55% last week | Short-term rate rise increasingly unlikely |
| December Fed hike probability | 64% | — | Inflation concerns linger |
Commodity prices reflected the ongoing conflict. Brent climbed to $87.68, with US crude at $81.49. Gold increased by 0.85%, supported by a softer dollar. Silver advanced nearly 1%, ending at $65.08.
Bitcoin tracked lower, shedding 0.78% to trade near $62,923. The VIX stayed around 14.6, remaining near session lows, even amid disappointing growth data and heightened geopolitical tensions.
The investor angle involves complexity, rather than just concerns over growth slowing. Weakness among consumers may influence the Fed’s upcoming decision, but it cannot eliminate the impact of an oil shock on long-term inflation forecasts.
| Analyst recommendations and calls | Documented view | Portfolio relevance |
|---|---|---|
| Sal Guatieri, BMO Capital Markets | Waiting until September is seen as more probable | Front-end duration appears to have firmer backing |
| Kyle Rodda, Capital.com | Geopolitical concerns are the primary macro obstacle | Continue monitoring oil and event hedges |
| John Sidawi, Federated Hermes | The low-volatility environment might prove temporary | Don’t expect risk protection to remain inexpensive |
| Juan Perez, Monex USA | Evidence of weakening in consumption is appearing | Weaker data limits dollar gains |
John Sidawi at Federated Hermes noted that markets have been accepting uncertainty without insisting on higher risk premiums. He cautioned that such a balance may not last. The subdued level of the VIX underlines that warning.
Risks: A lasting US-Iran deal has the potential to swiftly erase the risk premium on oil. Heightened tensions in the Strait of Hormuz, on the other hand, could send it higher. Jobs and inflation figures for August could also prompt markets to revisit Friday’s Fed expectations.
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