On the surface, the second week of August looked like a quiet one for markets. Underneath, there was a lot happening — and much of it matters for how advisers think about diversification into the autumn.

A Constructive Backdrop, With Caveats

Global equities extended their recent run, with the S&P 500 and Nasdaq notching a third straight weekly gain on the back of cooler US inflation data and continued optimism around artificial intelligence. Small caps performed well too, a sign that investors remain willing to take on risk where lower interest-rate expectations support valuations.

The inflation picture was the week’s main talking point. Softer consumer and wholesale price data eased pressure on the Federal Reserve to raise rates again. But the relief came with a catch: July retail sales fell unexpectedly, and consumer sentiment came in below forecasts, with households still concerned about the labour market and cost of living. Markets liked the disinflation story but were less comfortable with signs that the consumer may be losing steam.

That combination has shifted rate expectations. Futures markets are now leaning towards the Fed holding steady at its September meeting rather than resuming a hiking cycle — though the 10-year Treasury yield still edged up to around 4.69% on Friday, as investors weighed stronger energy prices against the softer growth signals. The message for advisers: the bar for another hike is higher, but the Fed isn’t ready to declare the inflation fight won.

Equity leadership stayed familiar, with technology and AI-linked names continuing to lead, even as some mega-cap names pulled back into the weekend. Corporate earnings remain broadly supportive, though the market is becoming more selective — companies are still beating expectations, but investors are increasingly demanding strong guidance rather than rewarding results that are merely “good enough.”

Commodities Take Centre Stage

Oil prices rose over the week amid ongoing uncertainty around a US-Iran peace deal and continued disruption to cargo through the Strait of Hormuz — a dynamic that adds a layer of complexity to the inflation outlook, since higher energy costs work against the disinflation narrative markets have been hoping for.

Gold and silver were the standout movers. Precious metals firmed meaningfully, reversing what had been a drag on diversified portfolios earlier in the year. The case for gold and silver remains underpinned by familiar structural forces: ongoing geopolitical tension, record levels of government debt, and limited fiscal discipline across G7 economies. If anything, these pressures have intensified in recent months, reinforcing the argument that the bull market in precious metals still has room to run — with mining equities particularly well positioned to benefit.

What This Means for Portfolio Positioning

For advisers building portfolios for internationally mobile clients, weeks like this are a useful reminder of why diversification across asset classes — and not just geographies — matters. TEAM’s UCITS Funds are designed with exactly this kind of environment in mind, blending equity, fixed income and alternative exposures, including precious metals, to help smooth the ride when narratives shift quickly between “soft landing” optimism and consumer-driven caution.

For clients seeking defined outcomes rather than full market exposure, Structured Notes continue to offer a way to participate in equity market gains while building in a level of capital protection — a relevant consideration given how selective equity markets have become around earnings and guidance.

Looking Ahead

This week’s economic calendar should help clarify whether the soft landing narrative can hold. Fresh labour-market data, housing figures and business surveys will be watched closely for signs that growth is slowing gently rather than abruptly. Retail earnings from Home Depot, Lowe’s, Target and Walmart will also offer a timely read on the health of the US consumer. Markets are still giving the economy the benefit of the doubt — but after a strong run, that patience may not last if the data disappoints.

At NEBA Private Clients we work with advisers to translate market moments like this into practical portfolio decisions — helping clients access diversified, professionally managed solutions built for a changing macro backdrop.

This article is based on insights and analysis provided by David Gorman of TEAM.

Risk Warning: The value of investments can fall as well as rise, and investors may not get back the amount originally invested. Past performance is not a reliable indicator of future results. This article is for informational purposes only and does not constitute investment advice.