August 2025 Commentary: A Curious Balance

Summary

• U.S. large-cap stocks, as measured by the S&P 500, gained 2.0% in August while small- cap stocks rose 7.1%, marking the best August for small-caps in 25 years. U.S. intermediate-term bonds increased by 1.2%.
• Jerome Powell delivered his final keynote as Fed Chair at the annual Jackson Hole Economic Symposium, with markets initially interpreting his remarks as dovish, though hawkish elements tempered rate cut expectations.
• At Jackson Hole, the Fed abandoned its average inflation-targeting framework, signaling a return to more traditional goals. The U.S. dollar dropped 1.3% on the news.
• Bond yields—the linchpin of continued expansion—remain subdued, reflecting a “curious balance” between a softening labor and housing market on one side and persistent inflation on the other.

Read and download the commentary here.