Monthly market brief: equities, bonds, crypto, and commodities in August 2026

August 2026 began amid lingering geopolitical tensions following the Iran conflict. Systematic trend-following funds, or CTAs, were underweight equities throughout the first half of the month. BofA reported that CTA equity positioning only returned to pre-conflict levels by August 21, but the recovery remained fragile, with a 3% drawdown in the S&P 500 potentially triggering over $100 billion in systematic selling.

The month-to-date performance, as of the close on August 21, showed constructive gains across major indices, with the Russell 2000's notable 21.74% year-to-date increase highlighting a domestic growth narrative that mega-cap tech still struggles to validate. The VIX remained subdued at 15.13, and the options market anticipated volatility around the Jackson Hole symposium.

The U.S. Treasury intervened in the long bond market, doubling its buybacks from $2 billion to $4 billion per operation, signaling active management of the long end of the curve. A U.S.-Japan currency alliance emerged, with coordinated dollar-selling and yen-buying through the Fed's FIMA facility. Treasury Secretary Bessent expressed concern over a replay of the late-1990s Asian currency crisis.

In corporate news, Moderna and Merck announced on August 19 that their personalized mRNA cancer vaccine met primary and secondary endpoints in a Phase melanoma trial, potentially cutting recurrence/death risk by 44%. This marked a significant turnaround after the stock had declined over 90% from its pandemic peak, nearly tripling in value.

Bitcoin broke above its 200-day moving average, reaching $79,025 as of August 22, driven by a $4 billion short squeeze following the Treasury's long-bond buyback announcement. Bitcoin ETFs saw $650 million in net inflows. Meanwhile, China hosted the World Humanoid Robot Games in Beijing, showcasing state-supported and strategically directed industrial policy advancements.