Week Ending: August 14, 2026
Tech-Tock
Information Technology Commodities Inflation: Contributions By Component*
Source: Bureau of Labor Statistics
*According to the Consumer Price Index (CPI)
Data released this week showed that the core Consumer Price Index (CPI) rebounded in July after a flat reading in June, confirming that June’s print was a fluke. Overall, core CPI rose 0.22% in July, suggesting that while the current inflation pace is unlikely to be hot enough to prompt immediate hikes, it keeps Fed policymakers on edge amid upside inflation surprises. Digging deeper into the July CPI print, we find a concerning point: Core goods returned to positive territory after subtracting from core inflation in the last two months, with all but one sector seeing price increases. More specifically, one category, information technology commodities, registered the highest monthly increase since April 2021. Are AI-driven price pressures re-emerging, or is July another “one-time” fluke? With demand for AI products and services continuing seemingly unabated, tech-related price pressures may prove more persistent.
Total Returns by Asset Class
Highlights of the Week:
High Yield: High yield spreads at relatively tight levels may be a natural focus for valuation-conscious investors, but the headline number tells only part of the story. Today's index is meaningfully higher in quality and shorter in duration than past high yield markets. Current spreads reflect that improved composition and what we view as a benign forward-looking default environment. With all-in yields in the low 7s, we believe the asset class offers attractive compensation and compelling carry that spreads alone may understate.
Corporates: This week saw $53 billion in new-issue supply, well above dealer expectations, bringing year-to-date supply to $1.47 trillion. Investors absorbed the supply fairly well, and investment-grade corporate spreads closed just one basis point (bp) wider on the week, at an option-adjusted spread of 78 bps as of Thursday’s close.
Municipals: For the week ending August 12, LSEG Lipper reported $759 million in municipal fund inflows, extending the streak to 17 consecutive weeks, though the pace slowed from last week’s $1.3 billion and remained below the recent average. Flows were split between open-end funds ($418 million) and exchange-traded funds ($341 million). July inflows were revised up to $7.1 billion, bringing year-to-date inflows to $64.7 billion, the second-highest level on record for the comparable period, behind only 2021.
Equities: U.S. equities maintained their upward momentum over the week, reaching new record highs on the back of in-line inflation data and resilient corporate earnings. From a sector perspective, performance was mostly positive, with energy, utilities, and health care leading the market higher, while communications, materials, and consumer discretionary lagged.
Securitized Products: The commercial mortgage-backed security (CMBS) market continues to show resilience amid geopolitical uncertainty and an elevated rate environment. Eight deals totaling $5.34 billion were priced this week, bringing year-to-date issuance to $116 billion, up 20% year-over-year. Even in a year of heavy gross and net supply, investor demand remained strong, and spreads tightened broadly this week across both fixed- and floating-rate paper.
Disclosure: This material reflects the firm’s current opinion and is subject to change without notice. Sources for the material contained herein are deemed reliable but cannot be guaranteed.
