MPC Markets Morning Call — 24th August 2026: Bond Yields and Iran Dominate a Seesaw Week
Wall Street closed higher on Friday but booked losses for the week as surging bond yields and Iran sanctions fears whipsawed sentiment. The S&P 500 and Nasdaq snapped three-week winning streaks while the Dow posted its second straight weekly decline. Oil rose for a sixth consecutive session after President Trump threatened sanctions on Iran’s trading partners, and billionaire Ray Dalio warned a US debt crisis could arrive within three years. ASX 200 SPI futures point to a 41-point rise at the Monday open as attention shifts to Nvidia earnings, Jackson Hole, and Australian CPI this week.
US markets ended Friday on a positive note — the Dow rose 0.98%, the S&P 500 gained 0.43%, and the Nasdaq added 0.44% — but all three benchmarks posted weekly losses as volatile Treasury yields and geopolitical uncertainty kept investors on edge. For the week, the S&P 500 fell 1.43%, the Nasdaq declined 2.05%, and the Dow lost 0.85%, with the Russell 2000 dropping 1.65% for its biggest weekly loss since June. Oil surged for a sixth straight day on Trump’s threat of sanctions against Iran’s trading partners, pushing Brent up 6.39% and WTI up 5.66% for the week. Treasury Secretary Bessent’s surprise bond buyback announcement provided only brief relief, with the 10-year yield settling at 4.738%. Ray Dalio warned investors to sell bonds and buy gold, estimating a US debt crisis could arrive “in three years, give or take two.” UBS raised its S&P 500 year-end target to 8,100. Here in Australia, SPI futures are up 41 points (+0.45%) to 9,028 as the final week of reporting season brings results from Wesfarmers, Woolworths, Qantas, and major supermarkets — with Goldman Sachs noting earnings downgrades are running at double the typical pace.
S&P 500 gained 0.43% on Friday to 7,674.37 but fell 1.43% for the week, snapping a three-week winning streak, as bond yields and Iran sanctions uncertainty whipsawed sentiment.
Oil futures rose for a sixth straight session after Trump threatened sanctions on Iran’s trading partners — Brent gained 6.39% and WTI rose 5.66% for the week, adding to inflation concerns.
Ray Dalio warned a US debt crisis could arrive within three years, advocating 10–15% gold allocations and reduced bond holdings as US government spending outpaces revenue by $2 trillion annually.
Treasury Secretary Bessent’s surprise doubling of bond buybacks provided only short-lived relief — BofA warns the dollar faces structural downside as yield suppression without fiscal restraint erodes policy credibility.
The week ahead is dominated by Nvidia’s earnings (Wednesday US), Fed Chair Warsh’s Jackson Hole debut (Thursday–Friday), and the July PCE inflation gauge — the Fed’s preferred measure.
ASX SPI futures point to a 0.45% rise at the Monday open, but Australian CPI data on Wednesday and a wave of major earnings (Woolworths, Wesfarmers, Qantas) will test sentiment as Goldman flags downgrades running at double the usual pace.
Equities: Friday Rally Masks a Bruising Week for Stocks
Wall Street closed higher on Friday as calmer trading emerged after a seesaw week dominated by gyrating Treasury yields. The Dow Jones Industrial Average rose 517.80 points, or 0.98%, to 53,277.01, the S&P 500 gained 33.21 points to 7,674.37, and the Nasdaq Composite added 113.29 points to 26,180.46. But the daily gains masked a painful week: the S&P 500 fell 1.43%, the Nasdaq declined 2.05%, and the Dow lost 0.85%, while the Russell 2000 small-cap index dropped 1.65% for its biggest weekly fall since early June.
Equity investors spent the week taking their cues from bond yields. Stocks fell on Thursday as yields rose, then rallied on Wednesday when yields dipped after Treasury Secretary Scott Bessent announced a surprise doubling of long-dated bond buybacks. Friday’s positive data — the strongest growth in the US services sector in nearly two years — helped ease nerves, though a slowing manufacturing sector weighed by supply disruptions from the Iran war tempered enthusiasm. UBS Global Wealth Management raised its S&P 500 year-end target to 8,100, citing a stronger earnings outlook and robust corporate profit growth.
Among the S&P 500’s 11 sectors on Friday, materials outperformed with a 2.2% advance, followed by healthcare (+1.3%) and financials (+1.0%). Utilities was the biggest laggard, finishing down 2.3%. In individual names, Robinhood rallied 13.7% on strong retail trading activity, while Coinbase climbed 8.2% and Strategy added 6% as bitcoin surged 6.4% to its highest levels since mid-May. Citadel disclosed it had offloaded more than 80% of the Situational Awareness stock portfolio it acquired last month, completing nearly 100 block trades totalling over $4 billion in market value.
Bonds, the Dollar & the Debt Debate: Dalio Sounds the Alarm
The bond market was the dominant force driving equities this week. The 30-year Treasury yield surged to its highest level since 2007, while the 10-year yield settled at 4.738% on Friday, up 0.89% on the session. Treasury Secretary Bessent’s mid-week announcement to double long-dated bond buybacks to $4 billion per operation initially calmed markets, but yields rebounded by Thursday, undoing most of the relief. BofA Securities warned the announcement’s timing — outside the regular quarterly refunding cycle — suggested the Treasury was primarily trying to contain borrowing costs rather than improve market liquidity.
Bridgewater Associates founder Ray Dalio weighed in forcefully on Friday, warning that a US debt crisis could arrive “in three years, give or take two.” Dalio estimates US government revenue at roughly $5.5 trillion this year against $7.5 trillion in spending, leaving a $2 trillion shortfall, with interest costs alone approaching $1 trillion. He advocated investors hold 10–15% of portfolios in gold and “a bit” of bitcoin, underweight bonds, and diversify across countries with strong finances. Gold jumped to its highest since May on Friday at $4,680.60, while bitcoin topped $77,000 heading for its biggest weekly rally since 2023.
BofA added that suppressing yields without corresponding fiscal restraint could leave the exchange rate as the primary adjustment mechanism, placing structural downward pressure on the dollar. The greenback weakened after the buyback announcement, and demand for protection against dollar declines has increased in options markets. BofA recommended a long NZD/USD position, targeting 0.62, expecting two further rate increases from the Reserve Bank of New Zealand. The US dollar index closed at 98.84, up 0.22% on the session but under pressure over the medium term.
Bridgewater’s Ray Dalio said investors should reduce bond holdings and allocate 10–15% to gold, with “a bit” of bitcoin, warning rising debt-service costs will eventually collide with insufficient investor demand. He advocates cutting the deficit to 3% of GDP from ~6% through spending cuts, higher revenue, and lower rates. “I expect non-government-produced monies like gold and Bitcoin to do relatively well,” he wrote. Similar fiscal strains confront the UK, China, and Japan.
Commodities & Energy: Oil’s Sixth Straight Rise on Iran Threat
Oil futures settled higher for a sixth consecutive session on Friday after President Trump threatened economic sanctions on Iran’s trading partners, raising expectations of tighter global supply. For the week, Brent crude gained 6.39% while WTI rose 5.66%, with WTI settling around $87.06. The sustained rally in energy prices is adding to inflation concerns at a time when the Fed is already grappling with stubborn price pressures.
Gold rose 0.85% on Friday to $4,680.60, buoyed by both geopolitical risk and Dalio’s public call to increase allocations. Silver dipped 0.56% to $69.53, while platinum fell 0.62% to $1,895.70. Copper was flat at $6.587. The lithium sector gained strongly, with the LIT ETF up 2.89% and uranium (URA) surging 5.13%. Iron ore was largely unchanged at $95.21. Bitcoin advanced 1.80% to $77,313.31, continuing its strong run as investors looked to non-government money stores of value.
In currencies, the Australian dollar slipped 0.11% to US71.67¢, while the US dollar index edged up 0.22% to 98.84. The VIX declined 3.88% to 15.13, suggesting options markets are not yet pricing in significant near-term risk despite the busy week ahead.
The Week Ahead: Nvidia, Jackson Hole & Australian CPI
This week brings a convergence of catalysts that will test the assumptions behind 2026’s equity rally. Nvidia reports second-quarter earnings on Wednesday after the US close — the company has become a proxy for the entire AI ecosystem, and its results will offer fresh insight into the spending demand underpinning the massive data-centre buildout. Nvidia recently partnered with six major financial institutions on financing platforms targeting more than $500 billion for AI infrastructure. The Philadelphia Semiconductor Index fell ~5% last week, making Nvidia’s report even more consequential.
Fed Chair Kevin Warsh delivers his first Jackson Hole address since taking office, with the symposium running Thursday to Friday. Warsh rattled markets after the July meeting by offering minimal forward guidance, and investors will be watching for clues on how he intends to communicate policy. Markets are pricing a 35% chance of a September rate hike, rising to 66% by December. Before that, Wednesday’s July PCE data — the Fed’s preferred inflation gauge — could reset rate expectations entirely.
Australia’s final week of reporting season kicks off with SPI futures up 41 points (+0.45%) to 9,028, pointing to a higher open following Friday’s Wall Street rebound. However, the week is front-loaded with risk. Goldman Sachs notes that FY27 earnings downgrades are running at double the typical pace, with three companies being downgraded for every two upgraded. Retailers including JB Hi-Fi, Myer, and Nick Scali have all flagged difficult conditions, and the focus now turns to supermarkets, Wesfarmers, and Qantas for clues on how the RBA’s rate rises and surging oil prices are hitting the economy.
- Monday 24 Aug — ASX earnings: Ampol (ALD), Ansell (ANN), PLS Group (PLS), Reece (REH), Bendigo Bank (BEN). No major AU or US economic releases.
- Tuesday 25 Aug — RBA Meeting Minutes (11:30am AEST); Woodside (WDS) and Coles (COL) results. US: Treasury Secretary Bessent speaks; CB Consumer Confidence.
- Wednesday 26 Aug — Key day: Australian CPI m/m (f/c 0.9% vs -0.1% prior), Trimmed Mean CPI m/m (f/c 0.3%). Woolworths (WOW), WiseTech (WTC), Intuit (INTU) results. US: Prelim GDP, Core PCE.
- Thursday 27 Aug — NVIDIA earnings (after US close). Jackson Hole Symposium begins. ASX: Wesfarmers (WES), Qantas (QAN), Harvey Norman (HVN), Mineral Resources (MIN). US: Salesforce (CRM), CrowdStrike (CRWD).
- Friday 28 Aug — Fed Chair Warsh’s Jackson Hole keynote. US: Durable Goods, Personal Income/Spending, PCE y/y. UoM Consumer Sentiment (Sat AEST). Marvell Technology, Workday, Autodesk earnings.
- Watchlist — July CPI data will shape the RBA’s September rate decision. A hot print raises the risk of another hike, though economists expect the next likely window is November 3 as the RBA won’t see August CPI before its September meeting.
