August's key developments included Nvidia's strong endorsement of durable AI spending, a hawkish message from Fed Chair Kevin Warsh at Jackson Hole, and a late-month rush into hard assets following a surprise Treasury buyback announcement. Portfolio considerations examine gold, silver, and bitcoin as protection against confidence in paper claims, the outlook for long-duration Treasuries, and the inflation data that could determine the Federal Reserve's next move.
From the original report
Selected passages from the original publication. Historical observations reflect the report's publication date, not current market advice.
1) The Party Continues – Nvidia provided a strong endorsement of AI spending durability, guiding FY2028 revenue growth to 70% – almost double the expectations. Absent supply constraints, growth could even approach 100%! Solid hyperscaler results pointed to improving returns on this datacenter spend, while an ongoing recovery in software share signals that concerns about AI-driven obsolescence were likely quite overblown.
2) Jackson Hawk – Chair Warsh leaned hawkish at Jackson Hole, calling recent inflation numbers “concerning” and warning that softer prints may not reflect improvement in underlying trends. The remarks cemented expectations for a September hike (2-year yields rose) and restored some Fed credibility after sparse commentary in July.
3) The Debasement Trade – A surprise Treasury buyback announcement eased 30-year yields off post-GFC highs above 5.30% – and stoked a late-month rush into hard assets. Gold rose 9.1%, silver 15.9%, and bitcoin futures surged 25.6% (best month since 2024).
Safety FROM numbers – Gold, silver, and bitcoin share one trait: governments cannot print more of them. With confidence in paper claims being tested, investors are once again appreciating that a measured allocation to hard assets is less a bet on any single asset than insurance against paper claims.
The Treasury Put? – Officials are clearly attentive to long-end yield levels – but they cannot repeal the supply of debt behind them. With deficits, quantitative tightening, and elevated term premia all pushing the same way, the relief may prove tactical rather than structural. Duration still deserves a place in portfolio construction, as it can provide a hedge to the business cycle at (currently) an attractive real yield!
The Path from Here – While recent monthly core inflation prints have been benign, year-over-year readings remain stubbornly above target. Thus far, the Fed has held firm, but pressures for a hike are rising. Upcoming inflation readings will be crucial in determining whether the FOMC can be patient without risking credibility or whether markets may force their hand into tightening.
For educational purposes only; not individualized investment, tax, or legal advice. Investing involves risk, including loss of principal.
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