finance

Published on
17/08/2026 – 11:40 GMT+2

Two pieces of data collided in Tokyo within hours of each other.

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Bond investors pushed the 10-year Japanese government bond yield to a three-decade high before the government reported that growth had come in at barely half the pace economists had forecast, a pairing that says a great deal about what is really driving Japan’s markets right now.

The economy expanded at an annualised rate of 1.1% in the second quarter, Cabinet Office data showed, well below the 2.0% forecast and down from a downwardly revised 1.9% pace in the first quarter.

Quarter on quarter, GDP rose just 0.3% against a forecast of 0.5%, marking a third consecutive expansion. Private consumption was flat, and capital expenditure fell 1.2%, while net exports, helped by the weak yen, added 0.5 percentage points to growth.

The 10-year JGB yield touched 2.93% earlier in the day, its highest level since September 1996, before easing slightly once the GDP figures landed.

The gap between weak growth and rising bond yields helps explain what is moving Japanese bonds now: not growth, but inflation and the currency.

The GDP deflator rose 2.6% year on year, and traders are increasingly betting that the Bank of Japan will raise its policy rate, currently at 1% and already a three-decade high, as soon as September to contain inflation and support the yen.

Tokyo and Washington spent billions defending the yen

The yen slid to 163.73 per US dollar in late July, its weakest level in roughly four decades, prompting Japan and the US to carry out their first joint currency intervention since 2011.

Japan deployed an estimated $85 billion (€73.3bn) in the first two days alone, while the US intervention was much smaller, according to Goldman Sachs.

The operation pushed the yen back to around 159 per US dollar.

There is currently a wide gap between Japanese and US interest rates, with the Federal Reserve’s benchmark rate still at 3.50% to 3.75%. The Bank of Japan’s September meeting is being watched as the next test of whether the currency’s recovery can hold.

Japan’s bond market matters well beyond Tokyo because of the yen carry trade, in which investors borrow cheaply in yen to fund purchases of higher-yielding assets abroad, from US Treasuries to emerging-market debt.

Rising Japanese yields erode that trade’s profitability and can force rapid unwinding, as it happened in August 2024, when a Bank of Japan rate rise combined with weak US jobs data sent the Nikkei down more than 12% in a single session and knocked roughly 3% off the S&P 500.

With JGB yields at three-decade highs and further tightening still expected, analysts say the conditions for a similar shock have not disappeared.

Nvidia has recruited Wall Street to bankroll its own customers.

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The US chipmaker said last week it had signed memorandums of understanding with Wall Street’s largest asset managers, including Apollo Global Management, Blackstone, BlackRock, Brookfield Asset Management, Goldman Sachs and KKR to raise upwards of half a trillion dollars for AI companies to borrow against, money that will buy its chips and build the servers that run them.

The six firms will set up what Nvidia calls “compute financing platforms,” drawing on institutional money, insurance funds and private credit. Borrowers can use the proceeds for the chips as well as servers, networking equipment, buildings and power supply.

Nvidia has the option to guarantee up to a quarter of any given deal, which lowers the interest rate its customers pay while leaving most of the credit risk with the lenders.

CEO Jensen Huang said he approached only these six companies and none refused.

Keeping that spending off their own books is precisely the point, and the fact that such a structure is needed at all tells investors a great deal about where the constraints in the AI boom now lie.

The financial engineering rests on a single reclassification. Graphics processing units (GPUs) have always been treated as equipment that loses value quickly, superseded whenever a faster generation arrives.

Nvidia is effectively asking lenders to treat them instead as long-lived infrastructure, closer to a toll road or a power plant, that can be borrowed against for years.

“These are revenue-generating assets now,” Huang said, describing them as productive, long-lived and transferable between customers.

Why the money had to come from somewhere else

The timing reflects a squeeze that has been building all year.

Microsoft, Amazon, Alphabet, Meta and other hyperscalers whose cloud platforms host most of the world’s AI workloads have together guided roughly $720 billion (€624bn) to $745 billion (€646bn) of capital spending in 2026, an increase of about 77% on last year.

What analysts expect the hyperscalers to spend in 2027 alone has more than doubled in the space of a year, from a consensus of $480 billion (€416bn) in August 2025 to $1.08 trillion (€943bn) this month, a rise of about 127%, according to Bank of America.

The pattern has repeated at every stage.

Analysts who already considered last year’s investment unsustainable then watched the hyperscalers guide higher at the start of 2026, revise those figures upward again through the year, and pencil in larger sums still for next year and 2028.

Moody’s has warned that spending on this scale is eating into free cash flow and pushing tech groups into heavier borrowing. Alphabet recorded negative free cash flow of $5.9 billion (€5.1bn) in a quarter when it spent $44.9 billion (€38.9bn) on projects.

That is the pressure the structure of Nvidia’s Wall Street deal relieves.

Debt raised through these “compute financing platforms” sits with the financing vehicles rather than on a hyperscaler’s own accounts and also has Nvidia’s backing, which protects credit ratings and leaves room for conventional borrowing elsewhere.

For smaller operators the effect is larger still as companies such as CoreWeave and Nebius, which lack investment-grade ratings and pay dearly for credit, gain access to capital on terms previously reserved for the giants.

What the market actually read into it

The reaction was more ambivalent than the headline number suggests, and came weeks after a July selloff driven by doubts over whether AI spending will pay for itself.

Essentially, equity investors saw a bottleneck being cleared while credit investors saw something else: the cost of insuring Nvidia’s own debt against default rose after the news and has roughly doubled since late May.

Their doubt concentrates on the reclassification previously mentioned.

“Chips depreciate fast and lose value the moment a newer generation arrives,” warned Nigel Green of financial advisory firm deVere Group, noting that lending against them only works if the collateral holds its value.

Critics also point out that Nvidia is helping finance purchases of its own products, deepening the circularity that already worries the sector.

Goldman Sachs CEO David Solomon called it “a pivotal moment of a historic AI investment cycle.”

Whether it proves pivotal in the direction Solomon means depends on a question nobody can yet answer: what will the value of a current GPU be in five years?

U.S. shipments of central air conditioners and air-source heat pumps surged in June, although slower growth for the first half of the year suggested the monthly increase followed uneven demand earlier in 2026.

Manufacturers shipped a combined 1.02 million central

Published on
14/08/2026 – 10:54 GMT+2

BP is going back into Venezuela.

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The agreement signed in Caracas on Thursday gives the company operatorship of Loran phase two, an offshore gas project holding more than four trillion cubic feet of proven gas resources, with Abu Dhabi’s XRG, Qatar’s UCC Oil and Gas Holding taking equal stakes beside it.

It is the clearest signal yet that the opening of Venezuela’s energy industry to foreign capital, underway since Maduro’s removal, is gathering pace.

All three companies will hold equal working interests, with BP as operator, and the licence remains subject to regulatory approvals.

PDVSA Gas, the state producer’s gas arm, transferred part of its interest to XRG, the international investment vehicle of Abu Dhabi’s ADNOC. For both XRG and UCC, a unit of the Qatari conglomerate of the same name, this marks a first entry into Venezuela.

The field itself is shared as Loran forms the Venezuelan portion of the Loran-Manatee accumulation, which straddles the maritime boundary with Trinidad and Tobago and holds roughly 10 trillion cubic feet of recoverable gas in total.

Shell won the licence for the first phase in June and is separately developing Manatee on the Trinidadian side, where first gas is expected next year.

BP says both Venezuelan phases will now be developed in parallel and signed a further memorandum of understanding covering exploration at the Carúpano East Block.

The agreements were concluded during a visit to Caracas by CEO Meg O’Neill and David Campbell, BP’s senior vice president for Latin America and the Caribbean.

A sector reopened under US pressure

The licences are the product of a bargain struck with Washington.

After Maduro was seized by US forces in January, interim president Delcy Rodríguez rewrote the country’s energy law at the Trump administration’s urging, opening the world’s largest proven oil reserves to foreign firms.

In return, the US relaxed sanctions that had frozen most Western investment, including the licences it revoked from BP, Shell and Chevron in 2025.

Eni, Repsol and Shell have all signed since.

The awards process stalled after the earthquakes of 24 June, which killed more than 6,300 people, and resumed only on Thursday, when the three Loran permits were issued and the agreements signed.

“I have a special interest in gas to promote national development,” Rodríguez said at the ceremony, which was broadcast on state television.

BP is not a newcomer as it held a licence for the Cocuina field from 2024, before Washington withdrew its permission to use it.

Originally published in Spanish on Asdrúbal’s personal Substack

In the weeks following the June 24 earthquake, numerous figures regarding the tragedy’s cost have circulated. The World Bank estimated direct physical damages at $19.6 billion, equivalent to nearly 17% of Venezuela’s GDP. These figures help gauge the magnitude of the disaster, but from an economic perspective, they fall short. Confusing damages with economic costs leads to flawed diagnoses and, often, to poor public policy decisions. Furthermore, it is also worth reviewing the methodology behind these measurements, as in many cases the magnitude of the tragedy is being overstated.

The economy doesn’t just lose when a building is destroyed. It loses when that building stops producing, when a company stops selling, when a port stops moving goods, or when thousands of workers halt their activities. The economic cost of a disaster is not measured by the value of what disappeared, but by the income that ceases to be generated while that productive capacity remains out of service. This is what we economists call distinguishing between the stock and the flow.

That is precisely the exercise we are attempting to carry out for La Guaira.

La Guaira accounts for approximately 6.2% of national transactions (based on past studies we have conducted on transactions in Venezuela), which translates to an economic activity of around $6.9 billion annually out of an estimated GDP of $111.3 billion. However, reducing the state’s importance to that percentage would be a mistake. Its true weight lies in the fact that it concentrates over 40% of the national logistics and transportation sector, thanks to the Port of La Guaira and the Maiquetía International Airport. Both constitute the country’s main entry and exit points for goods and passengers. When that hub stops operating, the impact is quickly transmitted to the rest of the economy.

The first commercial census reveals that barely 1,752 establishments remain operational out of the nearly 7,000 businesses existing before the earthquake.

Physical damages in the state likely range between $4 billion and $6 billion. That is, between 60% and 90% of La Guaira’s annual output. That proportion illustrates the magnitude of the asset shock, but it still doesn’t answer the central question: how much did the state stop producing as a result of the earthquake?

To approach that answer, we must observe how the economy functioned in the weeks following the quake. The port remained completely paralyzed for 28 days and only reopened gradually for cargo operations. The Maiquetía airport will recover its normal operations by the end of this year at best, with a partial opening in August. For nearly eight weeks, the two assets that sustain much of the state’s economic activity operated at a minimal fraction of their capacity.

Added to this disruption was the collapse of the business fabric. The first commercial census reveals that barely 1,752 establishments remain operational out of the nearly 7,000 businesses existing before the earthquake. In other words, three out of four companies ceased to function. In parishes like Caraballeda, Macuto, and Catia La Mar, around 40% of commerce suffered significant damage, and tourism (one of the state’s main economic activities) practically vanished for the entire season.

With these elements, it is possible to build a reasonable estimate of the lost flow of economic activity. Our central scenario points to a contraction of nearly 35% of La Guaira’s GDP during 2026, with a year-on-year drop of between 55% and 70% during the third quarter, which represents the peak of activity disruption. The spending associated with reconstruction, the gradual recovery of the port and airport, and emergency credit lines will prevent an even deeper contraction, but they will hardly change the overall diagnosis.

Translated into numbers, La Guaira is expected to lose out on generating around $2.4 billion in economic activity during 2026 compared to the pre-earthquake scenario. That is, perhaps, the best approximation of the disaster’s direct economic cost for the state during its first year. It is a loss equivalent to more than a third of its annual economy, and quite distinct from the cost of rebuilding the destroyed assets.

The earthquake could cost Venezuela between three and four points of growth during 2026 compared to the pre-disaster baseline.

However, even that estimate remains conservative because the state does not operate in isolation. The temporary closure of the country’s main logistics hub drove up transportation costs, forced operations to be diverted to Valencia, Barcelona, and Maracaibo, increased delivery times, caused congestion in alternative ports, and disrupted supply chains in the central region of the country. These indirect effects explain why the national impact ends up being considerably larger than the mere loss of La Guaira’s output.

Our estimate is that the drop in the state’s activity subtracts approximately 2.2 percentage points from Venezuela’s GDP growth due to direct effects. When factoring in the deterioration of the logistics sector and the spillover effects on commerce, manufacturing, and consumption, the earthquake could cost Venezuela between three and four points of growth during 2026 compared to the pre-disaster baseline.

This difference between physical damage and economic cost is not just a methodological detail. It is a fundamental distinction for designing the reconstruction. If the objective is limited to replacing buildings and infrastructure, the country may recover part of the lost assets. But if the priority is to restore La Guaira’s productive capacity as soon as possible, then investment decisions must change. Reconstruction must focus first on the port, the airport, road connectivity, and financing the thousands of small businesses that make up the state’s economic fabric. Every week these activities remain partially paralyzed, the economic cost of the disaster will continue to rise.

During 2027, we will likely see very high growth rates in La Guaira as a result of the reconstruction process and the low baseline left by 2026. It would be a mistake to interpret these figures as a full recovery. Recovering a capital stock equivalent to between 60% and 90% of the state’s annual output will require several years of sustained investment, institutional stability, and access to financing. Yet, every crisis also opens an opportunity to do things better. La Guaira can be rebuilt by replicating the vulnerabilities of the past, or it can become the starting point for a more modern and efficient logistics infrastructure.

If investments are properly targeted, if financing reaches the businesses that sustain the productive fabric, and if reconstruction manages to become a shared project among the public sector, the private sector, and international cooperation, the state will not only recover what was lost: it can emerge stronger. In the end, true success won’t be returning to where we were before the earthquake, but leveraging this tragedy to build a logistics platform capable of driving Venezuela’s growth for decades to come.

The true indicator of success will not be next year’s growth rate, but the speed at which La Guaira regains its role as Venezuela’s premier logistics platform.

Published on
13/08/2026 – 12:28 GMT+2

The Intercept and the Freedom of the Press Foundation went to court in New York on Wednesday to shut down Truth API, a subscription launched this month by Trump Media and Technology Group, the Nasdaq-listed company behind Truth Social.

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The subscription provides privileged access to US President Donald Trump’s social media posts straight to trading firms, sending them fractions of a second before they appear on the public timeline, which is enough time for high-frequency algorithms to execute thousands of orders before others process the information.

Contracts run from about $60,000 (€52,000) to $100,000 (€86,600) a month and cover the platform’s 10 most-followed accounts, among them US President Donald Trump, the White House itself, US Vice President JD Vance, FBI Director Kash Patel and Health Secretary Robert F. Kennedy Jr.

More than 10 customers have signed up, mostly high-frequency trading firms, according to company executives.

Interim CEO Kevin McGurn told an earnings call on Monday that subscribers receive news “fractionally faster” than everyone else, having earlier pitched it as a real-time channel for the platform’s most market-moving posts.

US President Donald Trump holds roughly 41% of the company through a revocable trust overseen by his eldest son, Donald Trump Jr., with the stake currently worth close to $1 billion (€866mn).

Official announcements, The Intercept and the Freedom of the Press Foundation argue, belong to the public rather than to whoever pays most for them.

Two constitutional claims

The complaint, which names US President Donald Trump alongside deputy chief of staff Dan Scavino, executive assistant Natalie Harp and the Executive Office of the President, calls the arrangement “profoundly corrupt”.

It argues the service breaches the First Amendment by denying equal access to presidential announcements and the Fifth by conditioning that access on unreasonable sums, noting that many of the 9,000 to 11,000 posts Trump has published since January 2025 came with no White House statement.

“Trump is trying to enrich himself by privatizing government information,” said Ben Muessig, editor-in-chief of The Intercept.

A Trump Media spokesperson countered that critics show “a failure to grasp the distinction between public and nonpublic information”, adding that left-wing activists were weaponising the courts.

The White House has not commented on the lawsuit which follows a request last month from US Senators Elizabeth Warren and Adam Schiff for the Securities and Exchange Commission to examine whether the service undermines market integrity.

A pattern that predates the paywall

The service formalises an advantage that has drawn questions for months.

On several occasions this year, futures markets have registered unusual bursts of activity minutes before major Iran war announcements appeared on US President Donald Trump’s account.

No investigation has reached a conclusion.

The clearest case came on 23 March, when the S&P 500 and oil futures recorded isolated volume spikes at about 6:50am in New York. Fifteen minutes later Trump posted that talks with Iran had taken place and strikes on its energy infrastructure were paused.

Equity futures jumped more than 2.5% and West Texas Intermediate fell almost 6%.

According to one analysis of 1,341 posts between late January and early April, conducted by the Queensland University of Technology, there were 15 episodes that raised suspicions of insider trading.

Published on
12/08/2026 – 16:50 GMT+2

Two of the most influential voices in energy markets set out opposing readings of the year on Wednesday.

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The IEA now expects the world to burn less oil in 2026 than it did in 2025, its first such call since Covid-19 ground the global economy to a near-halt, while OPEC still pencils in growth, leaving them more than two million barrels a day apart.

The Paris-based IEA now expects global oil demand to fall by 1.6 million barrels per day (mb/d) in 2026, a downgrade of 510,000 b/d from July.

“The ongoing closure of the Strait of Hormuz and elevated fuel prices continue to weigh on oil consumption,” it said, cutting its second-half forecast by roughly 550,000 b/d.

OPEC still expects demand to grow, though its estimate has been trimmed for a fourth consecutive month, to 580,000 b/d from 780,000 b/d.

The producer group has consistently argued the war has done less damage to consumption than Western forecasters believe, and the two sets of numbers imply a difference of about 2.2 mb/d in what the world will burn this year.

Supply still 6.3 million barrels short

The supply picture explains the pessimism.

Global production rose by 2.4 mb/d to 101.5 mb/d in July but remained 6.3 mb/d below year-earlier levels, with 8.3 mb/d of Gulf output still shut in.

Gulf production climbed to 23.9 mb/d, yet regional exports fell 2.1 mb/d to 15 mb/d after the Strait of Hormuz was effectively closed again in early July and tankers and infrastructure came under attack, with loadings sliding from 20 mb/d to around 12 mb/d.

With no deal to reopen the waterway or secure passage through Bab el-Mandeb, the IEA cut its supply forecasts again and now expects output to fall by 4.3 mb/d this year.

Observed global stocks also dropped by 69 million barrels in July to just under 7.9 billion, down 410 million since the war began.

Both bet on 2027

Where the two agree is next year.

OPEC now expects demand to grow by 2.2 mb/d in 2027, an upgrade from the 1.94 mb/d it forecast last month, while the IEA goes further still at 2.4 mb/d.

That is an inversion worth highlighting, as the gloomier forecaster for this year delivers a more bullish read for the next.

The IEA reads the damage as a blockage rather than a collapse, oil that cannot reach buyers rather than demand that has vanished, so the deeper this year’s hole, the steeper the climb out of it once Hormuz reopens.

OPEC, which never accepted that consumption fell much, has less ground to make up for.

The agency’s outlook rests explicitly on de-escalation, assuming flows gradually recover and turning this year’s supply contraction into growth of 8.3 mb/d, flipping a 1.3 mb/d deficit into a 4.6 mb/d surplus.

Published on
12/08/2026 – 8:34 GMT+2

Oil prices climbed and world stocks were mixed on Wednesday, with Asian shares mostly higher even as Wall Street slipped further from last week’s record highs, as investors awaited a crucial US inflation reading and watched for any breakthrough in the stalled Iran war talks.

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The price of a barrel of Brent crude, the international benchmark, was up 0.9% at $89.67 early on Wednesday. US benchmark crude picked up 0.9% to $83.98.

Gold edged up 0.8% to $4,400.44 an ounce, while silver gained 1% to $65.30 an ounce.

Iran has rejected a comment by US President Donald Trump suggesting that, since Tehran is seeking compensation as part of any talks to end the war, Washington would demand the same.

The United States and Israel attacked Iran in late February, a strike that led to the closure of the Strait of Hormuz and kept much of the world’s oil pent up in the Middle East. Last month alone, Brent’s price swung between $72 and $102 a barrel.

Meanwhile, an attack by Iran-backed Houthi rebels on a vessel in the Bab el-Mandeb strait, off Yemen’s southern tip, has raised concerns that the violence could reignite civil war and further threaten regional shipping routes.

Higher oil prices worsen inflation, and they have pushed the average cost of a gallon of regular petrol in the US to $4.01, according to AAA — up from less than $3.14 a year ago.

That has Wall Street’s attention fixed on Wednesday, when the US government releases its latest monthly inflation reading. Economists expect it to show inflation slipped to 3.4% in July from 3.5% in June.

On Tuesday, the S&P 500 fell 0.3% for a second modest drop since setting its all-time high on Friday. The Dow Jones Industrial Average dipped 184 points, or 0.3%, and the Nasdaq Composite sank 0.6%.

Cooler inflation could ease pressure on the Federal Reserve to raise interest rates to tamp down price increases.

Higher rates could curb inflation, but they would also drag on the wider US economy by making it more expensive for households and businesses to borrow, while undercutting prices for stocks and other investments.

Treasury yields have jumped since the war with Iran began, driven by higher oil prices and inflation worries, sending long-term US mortgage rates to their highest levels in a year.

Tokyo’s Nikkei 225 gained 0.6% to 67,334.94.

In South Korea, the Kospi jumped more than 4% to 6,597.90 on renewed buying of computer chipmakers. Samsung Electronics gained 7.7% and memory chipmaker SK Hynix rose 7.1%.

Taiwan’s Taiex advanced 0.8%.

The Shanghai Composite index added 0.3% to 3,946.51, while Hong Kong’s Hang Seng slipped 1.2% to 25,352.13.

In Australia, the S&P/ASX 200 lost 0.6% to 9,197.00.

In other early Wednesday dealings, the dollar rose to 159.41 yen from 159.30 yen. The euro slipped to $1.1535 from $1.1544.

Additional sources • AP

European shares have started August 2026 in almost the opposite way to what their seasonal reputation would suggest.

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The EURO STOXX 50 and DAX are hovering near record highs, while the CAC 40 remains close to its peak. Yet August has historically been one of Europe’s weakest months.

That contradiction raises a more interesting question than whether investors should simply “sell in August”.

The data suggests August is not consistently a bad month. Instead, its poor reputation has been shaped by a small number of extraordinary market shocks.

European markets are defy ‘August curse’

European shares have started August 2026 in almost the opposite way to what their seasonal reputation would suggest.

The EURO STOXX 50 and DAX are hovering near record highs, while the CAC 40 remains close to its peak. Yet August has historically been one of Europe’s weakest months.

That contradiction raises a more interesting question than whether investors should simply “sell in August”.

The data suggests August is not consistently a bad month. Instead, its poor reputation has been shaped by a small number of extraordinary market shocks.

Germany’s DAX, which tracks the 40 largest companies on the Frankfurt exchange, tells the same story going back to 1970.

August has averaged a loss of 1.03%. September has averaged a loss of 1.64%.

France’s CAC 40, which tracks the 40 biggest companies in Paris, has data going back to 1988. August has averaged a loss of 1.22%. September has averaged a loss of 1.38%.

Three different countries, three different stretches of history — and exactly the same ranking. September worst, August second.

Yet August 2026 has looked nothing like that.

On 11 August, the EURO STOXX 50 closed at an all-time high above 6,560 points, up roughly 13% since the start of the year. The DAX moved above 26,450 for the first time, while the CAC 40 finished around 8,740 points.

So who is right — the calendar or the market?

The short answer: the calendar has a much weaker case than it appears.

The average August is not the typical August

An average is only useful when the numbers around it are relatively similar.

Picture five people walking into a room. Four earn €30,000 a year, one earns €1 million. The average income in that room suddenly looks far higher than what most people actually take home.

August equity returns have a similar problem. A handful of extreme crashes drag the long-term average sharply lower.

That is where the median becomes useful. It is simply the middle observation once every August return is ranked from worst to best, so half the years sit below it and half above — a better guide to what a typical August actually looks like.

For the EURO STOXX 50, the median August return is -0.19%, a very different picture from the -1.42% average. The typical August has been close to flat.

Five Augusts explain the damage

Most of the damage comes from five extraordinary episodes.

In August 1998, the EURO STOXX index fell 14.44% as Russia defaulted on domestic debt and devalued the rouble.

In August 1990, it dropped 13.82% after Iraq invaded Kuwait. August 2011 brought a 13.79% fall as the eurozone debt crisis intensified around Italy and Spain. In August 1997, the index lost 9.99% as the Asian financial crisis spread across the region, and in August 2015 it fell 9.19% when China devalued the yuan.

These were not ordinary corrections. They were global shocks that happened to land in August.

Strip out those five years and the EURO STOXX 50’s average August return flips from -1.42% to +0.17%. Five years out of 39 turn a seemingly weak month into a slightly positive one.

Why can August amplify a shock?

The explanation may have less to do with the month itself than with how markets function during the summer.

Europe effectively goes on holiday in August. Trading desks thin out and fewer investors are actively setting prices. That does not cause a sell-off on its own, but it can make markets more sensitive once one begins.

There are also fewer scheduled monetary-policy decisions. The European Central Bank’s latest meeting was in July, with its next scheduled decision not due until September.

The US Federal Reserve follows a similar summer gap, leaving markets with fewer major policy events to anchor expectations at precisely the moment liquidity is thinnest.

Then there is Jackson Hole. The Federal Reserve’s annual conference in Wyoming, held later in August, can become a major market event in its own right, particularly when investors are hunting for clues on interest rates.

This year’s gathering carries extra weight: it is Kevin Warsh’s first Jackson Hole address as Fed chair.

August therefore combines three potentially volatile ingredients: thinner liquidity, fewer scheduled policy events, and the possibility of a significant central bank signal arriving late in the month.

What makes August 2026 different?

The historical pattern is only useful if investors understand what has changed.

European equities entered August at or near record highs, underpinned by strong earnings expectations. Reuters reported that analysts had raised expectations for second-quarter earnings growth across the STOXX 600 to almost 21%, up from 12.5% in May — giving markets a fundamentally stronger backdrop than the historical average would suggest.

But there is another side to the ledger. The Middle East energy shock remains a risk for Europe: higher energy prices could push inflation back up while squeezing consumers and corporate margins at the same time.

Eurozone inflation eased to 2.8% in June, down from 3.2% in May, though a fresh energy shock could complicate the path back to the European Central Bank’s 2% target.

That leaves an unusual setup heading into the rest of the month.

So should investors fear August?

The historical record does not say European stocks must fall this month. In fact, the EURO STOXX 50 and DAX have both finished August higher almost half the time.

What history does show is more subtle: August is not necessarily Europe’s seasonal crash month. It is a month in which rare shocks have historically produced unusually large losses. That distinction matters in 2026.

Investors do not need to predict whether August will end higher or lower. The more useful question is whether markets, having just reached record highs, are sufficiently prepared for an unexpected shock arriving while liquidity is thin.

That is what the August pattern is really warning about — not a calendar effect, but a vulnerability.