Cooling Inflation And Easing Yields Push Us Stocks To Record Highs

August 13, 2026 Daily Macro Market Report

Market at a Glance

The core story for Thursday, August 13, 2026 in US markets is: “inflation is not as bad as feared, yields edged lower, and stocks hit fresh records.”

• Equities: S&P 500 ETF (SPY) +0.71%, Nasdaq-100 ETF (QQQ) +1.21%, both pushing into record territory
• Bonds: 10-year Treasury yield at 4.68%, down about 0.43% on the day (roughly 4–5 bps lower, consistent with intraday quotes)
• Dollar: US Dollar Index (DXY) at 99.83, essentially flat on the day (+0.01%)
• Commodities: Gold, silver, and oil all down around 1–2%, giving back part of recent gains
• Crypto: Bitcoin -0.05% (flat), Ethereum +0.44% (small bounce)

The backdrop is a combination of cooler-than-expected producer inflation data, softer oil prices, and still-high but slightly easier long-term yields. AP reports that July US wholesale inflation (PPI) came in weaker than in June and below economists’ forecasts, which pulled Treasury yields lower and helped drive stocks to new all-time highs.

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1. Rates and Bonds: “Still high, but today was a breather”

1) Today’s moves

• 10-year Treasury yield: 4.68% (1D -0.43%)
• 10-year real yield (TIPS): 2.42% (1D -0.41%)
• Yield curve (10Y–2Y spread): 0.48% (1D 0.00%)

Quick plain-language definitions:

• Treasury yield: The interest rate the US government pays to borrow. When it goes up, borrowing costs for mortgages, corporations, and governments tend to rise.
• Real yield (TIPS): The “after-inflation” yield. A high real yield means investors can earn a decent inflation-adjusted return just by holding safe government bonds, which can make riskier assets like stocks less attractive.
• Yield curve spread (10Y–2Y): The 10-year yield minus the 2-year yield. When it’s positive and rising, it often signals expectations for healthier long-term growth.

Today, long-term yields inched lower, so bond prices rose. Mortgage market commentary also highlighted that the 10-year yield fell about 4–5 basis points to around 4.65–4.66%, putting it near three-week lows.

2) Why did yields fall? – “Producer inflation surprise”

According to AP and other market recaps, the key driver was July US producer price inflation (PPI) coming in softer than expected.

• PPI measures inflation in the prices businesses pay to produce goods and services, which can later feed into consumer prices (CPI).
• Yesterday’s (August 12) CPI report showed prices up 0.1% month over month and 3.4% year over year, matching forecasts but slightly below June’s 3.5%.
• With today’s PPI also coming in “less bad,” markets reinforced the idea that the Fed may not need to rush into further rate hikes.

In other words, the data reinforced the narrative that inflation has likely peaked and is slowly cooling, even if it remains above the Fed’s 2% target.

3) Putting it in longer-term context

• Over the past 90 days, the 10-year yield is still up about 4.7%, so despite today’s dip it remains elevated around 4.68%.
• Structurally, the 10-year yield has been on a gentle uptrend since late 2023, rising from roughly 4.38% to around 4.60% on monthly averages.
• The 10Y–2Y spread turned back into positive territory in 2024 after a long inversion (a classic recession warning), but has been drifting slightly lower again in 2026.

What does this mean for investors?

• Short term, it’s helpful: A modest drop in yields eases pressure on growth and tech stocks, whose valuations are very sensitive to interest rates.
• But the overall level is still a headwind: 10-year yields near the high-4% range and real yields in the mid-2% range are historically high. That means bonds alone offer attractive returns, making investors question how much extra risk they want to take in equities.
• Curve normalization: A positive 10Y–2Y spread around 0.48% suggests markets are leaning toward a “soft-landing” scenario, where growth slows but avoids a severe recession.

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2. Equities: AI and growth lead a breakout to new highs

1) Today’s scorecard

• S&P 500 ETF (SPY): 777.98 (+0.71%)
  → The underlying S&P 500 index pushed above 7,800 to a new all-time high.
• Nasdaq-100 ETF (QQQ): 732.47 (+1.21%)
  → Tech and AI-related megacaps led the move higher
• Dow Jones ETF (DIA): 537.91 (+0.14%)
  → More muted, reflecting slower gains in traditional value and industrial names

AP’s closing recap emphasized that the latest inflation data, combined with easing oil prices, helped propel the major indexes to record levels.

2) Why so strong? – “Less-bad inflation + AI growth story”

1. Cooler inflation → Lower rate fears → Valuations feel less stretched

   • If inflation stayed hot, the Fed would either keep rates high for longer or hike again.
   • Instead, CPI yesterday and PPI today both came in in line or softer than feared.
   • That allowed yields to drift down, which is especially supportive for high-growth, high-duration assets like big tech.

2. AI and semiconductor leadership

   • Market commentary continues to highlight AI and semiconductor stocks as leaders of this rally.
   • The fact that QQQ is outperforming SPY (1D +1.21% vs. +0.71%) confirms that growth and tech are in the driver’s seat.

3. Index inclusion and event-driven flows

   • In today’s tape, one of the eye-catching stories was Reddit’s upcoming inclusion in the S&P 500, which sent the stock sharply higher.
   • These event-driven flows add further momentum to the tech/platform complex.

3) Short- and medium-term context

• Over the last 7 days, SPY is up +1.23% and over 30 days +3.48%; over 90 days, +5.52%.
• QQQ is up +2.49% over 7 days and +3.43% over 90 days, showing stronger recent momentum.
• Structurally, the Fed funds rate has been drifting lower since late 2024, but long-term and real yields have remained elevated.
  → This means short rates are easing, but the longer-term cost of capital is still high, which could eventually cap how far valuations can stretch.

What does this mean for investors?

• Index investors: Today’s action looks like a classic late-stage momentum leg, with indexes already at or near record highs pushing even higher. If inflation data continues to behave, there may be further upside, but the margin of safety is thinner.
• Growth/tech investors: On days when yields slip, growth names benefit disproportionately. However, with real yields still high, the risk of sharp pullbacks if rates jump again remains very real.
• Cash-heavy investors: New highs often trigger FOMO. In this environment, it’s especially important to stick to dollar-cost averaging, diversification across sectors and asset classes, and clear risk limits, rather than going “all in” after a big run.

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3. Dollar and Commodities: Dollar pauses, metals and oil take a breather

1) Today’s numbers

• US Dollar Index (DXY): 99.83 (1D +0.01%, 7D +0.17%, 30D -1.28%)
• Gold ETF (GLD): 399.25 (1D -1.40%)
• Silver ETF (SLV): 58.24 (1D -1.39%)
• Oil ETF (USO): 125.07 (1D -1.75%)

Think of the Dollar Index (DXY) as a scoreboard of the US dollar versus a basket of major currencies (euro, yen, pound, etc.). When it goes up, the dollar is stronger; when it goes down, the dollar is weaker.

Today the dollar was basically unchanged, but over the past month it has weakened by about 1.3%. That lines up with the idea that markets see limited room for further upside in US rates.

Gold, silver, and oil all fell about 1–2% today, likely reflecting:

• A partial giveback of recent safe-haven and inflation-hedge flows, and
• The perception that today’s inflation data was less threatening, reducing demand for hedges.

Easing oil prices were mentioned specifically in AP’s coverage as a factor providing relief to investors and supporting stock gains.

What does this mean for investors?

• Dollar: In the near term, the dollar looks neutral, but the 30-day trend toward mild weakness is a tailwind for non-US assets (Europe, Japan, emerging markets).
• Gold and silver: Today’s drop looks like a healthy consolidation after prior strength. With inflation still above target and real yields high, the longer-term outlook for precious metals is mixed: they can benefit from uncertainty but face headwinds from attractive bond yields.
• Oil: Lower oil prices are good news for consumers and many businesses, feeding into lower transport and energy costs. If this continues, it can help nudge CPI and PPI even lower over the coming months, reinforcing today’s “less-bad inflation” narrative.

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4. Global & Crypto: Quiet sympathy moves behind US leadership

1) Global equity ETFs

• Emerging Markets (VWO): 60.60 (1D +0.31%, 30D +2.57%, 90D +3.82%)
• Europe (VGK): 92.59 (1D +0.37%, 30D +4.86%, 90D +9.40%)
• Japan (EWJ): 98.56 (1D +0.79%, 30D +4.97%, 90D +8.81%)

As US markets hit record highs, the rest of the world is quietly tagging along:

• Europe and Japan are up nearly 9% over the past 90 days, not far behind US benchmarks.
• A slightly weaker dollar over the last month has been supportive for non-dollar assets.

2) Crypto

• Bitcoin (BTC): $63,384 (1D -0.05%, 90D -19.83%)
• Ethereum (ETH): $1,886 (1D +0.44%, 90D -15.15%)

Crypto had a quiet day relative to equities and bonds.

• Bitcoin was essentially flat.
• Ethereum bounced modestly but remains down double digits over 90 days.

This reflects a phase where, among risk assets, traditional markets (equities and bonds) are taking center stage, driven by inflation and rate headlines, while crypto plays more of a secondary role.

What does this mean for investors?

• Global equities and crypto can still play useful roles for diversification.
• But in a tape dominated by US inflation and Fed expectations, the main action is in US large-cap equities and Treasuries. Allocation decisions should recognize where the primary drivers currently are.

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5. Connecting today to the 5-year structural picture

Finally, let’s connect today’s moves to the longer-term macro trends from the last five years.

1. The Fed funds rate has already peaked and is drifting lower

   • Since late 2024, the policy rate has moved from the mid-4% range down into the mid-3% range.
   • That signals a shift from “emergency tightening to fight inflation” toward a more balanced stance watching both inflation and growth.

2. But long-term and real yields remain structurally high

   • The 10-year nominal and real yields have both been on upward trends since 2023.
   • Markets seem to believe that while the Fed may trim short rates, we’re not going back to the ultra-low-rate world of the 2010s. Higher structural inflation and heavy debt loads mean rates may need to stay higher for longer.

3. Inflation has come off the peak but is still above target

   • CPI and core PCE have cooled from their 2021–2022 spikes but remain in the 3%+ zone, above the Fed’s 2% goal.
   • That’s why each new inflation print still moves markets: the fight is not fully over, and every data point can shift expectations about how long rates stay “higher for longer.”

Summing up today in that context:

• Near term: Slightly softer inflation and lower oil prices drove a classic risk-on reaction: lower yields, higher stocks.
• Medium term: With the policy rate easing but long-term and real yields still elevated, markets are locked in a tug-of-war between “expensive equities” and “attractive bond yields.”
• Long term: The past five years mark a shift away from the era of near-zero rates and ultra-cheap money. Even on days like today, when markets celebrate cooler inflation and record highs, the underlying regime of higher structural rates and mounting debt remains in the background.

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Final Takeaways: How should an everyday investor think about this?

For a beginner or long-term investor, here are the key messages:

1. Inflation came in less hot than feared, nudging yields down and pushing stocks, especially tech, to new all-time highs.
2. Despite today’s relief, long-term and real yields are still high, so bonds offer genuinely attractive returns for the first time in years.
3. The further into record territory stocks go, the more important diversification, gradual entry (dollar-cost averaging), and risk management become.

In the days ahead, inflation and labor data, plus Fed communication, will continue to drive the swings in yields and equity valuations. In an environment where one data release can move markets so sharply, it’s crucial not just to follow individual stock stories but also to keep an eye on the big three macro levers: inflation, interest rates, and the dollar.

This content is for informational purposes only and does not constitute a recommendation to invest in any specific security or asset.