Week in review and thoughts for the week of Aug. 10, 2026

By week’s end, crude oil prices started moving higher on growing pessimism. On Saturday, Iran upped the ante further. Tehran put forward a number of unrealistic demands before it would consider reopening the Strait. The list included the removal of sanctions, unfreezing blocked Iranian assets, a withdrawal of US naval and air assets from around Iran, and having the US issue a declaration that it would refrain from further attacks on either Iran or its proxies.

None of these are going to fly as far as Washington is concerned. And so we are likely to see crude oil prices push higher. Meanwhile, traffic through the Strait fell to only 33 vessels from last Monday through Thursday versus 50 during the same period a week earlier. Shipping risks also increased over the weekend. The UAE said another of its ADNOC-linked vessel was hit by an Iranian missile.

Base metals

Outside of crude, most other commodity markets finished higher. In the base metals group, copper, zinc, and aluminum each added between 2% to 3% last week. Lead and tin were up by about 0.5%. Nickel was the only metal that lost ground (down 1.4% on the week). The reason: news the Indonesian government seems to be easing its stance on nickel production by granting Weda Bay Nickel (one of Indonesia’s largest nickel producers) an additional ore quota of 25 million tons.

Copper prices also hit record highs last week (basis cash LME as well as on the CME) after Congo’s economy minister abruptly announced the export of copper and cobalt concentrates is prohibited, with the ban taking effect immediately. The minister said the halt was needed to “encourage mining operators to market or export commercial mineral products with high added value” — a concept Indonesia first conceived of years ago.

After an initial burst higher, copper prices reversed course. Why? Investors realized the vast majority of Congo’s concentrates are processed domestically, and so the ban will not change things very much. The impact on cobalt concentrates is equally minimal because much of this material is also processed domestically. Copper nevertheless enjoyed an element of support all week from lingering uncertainty about the White House decision on copper cathode tariffs. An announcement was supposed to come out by the end of June. We are still waiting.

Precious metals and steel

With the general dollar index weakening over the course of the week, gold and silver prices both pushed sharply higher. Gold has already been looking better on the charts for some time now, and so we were not surprised by its latest upward move. Prices finished at just over $4,400/ounce on Friday, a two-month high. Silver ended at just under $64/ounce, finishing at a six-week high. In the ferrous space, US steel prices continue to move higher. There was a bit of a recovery in Chinese valuations as well.

US equities

Outside of the commodity space, US equities continued their stunning rally. The S&P 500 and the Dow each finished up 3%. NASDAQ ended up 5.2%. A wave of encouraging corporate earnings, renewed leadership from AI-related stocks, and perceptions of easing geopolitical tensions in the Persian Gulf helped the move. Materials and mining stocks stood out as precious and industrial prices climbed. Homebuilder stocks also pushed sharply higher as declining Treasury yields improved the outlook for interest-rate-sensitive industries. For the week, the two-year note yield settled down nine basis points to 4.20%. The 10-year yield settled at 4.65%, down 10 basis points on the week.

Jobs data

The decline in treasury yields was helped by Friday’s non-farm payroll report. It showed 23,000 jobs lost in July compared to a consensus estimate of an 86,000-job gain. Meanwhile, the June number was revised to +20,000 (from +57,000). In effect, there has been no new net job creation for the past two months.

The July unemployment rate decreased to 4.1%, down from 4.2%. But average hourly earnings increased by a scant 0.1%. In other words, workers are not keeping up with inflation. The job losses were not uniformly spread out, however. There was a 22,000 net job gain in construction and healthcare, 18,000 in professional and business services, and 5,000 more in manufacturing. However, the retail sector shed 20,000 jobs, while 40,000 jobs were lost in leisure and hospitality as the World Cup wrapped up. The biggest decline (50,000) was in local government positions.

Some of the other labor readings we got last week were mixed. The July ADP private payroll report came in at 44,000, below the consensus reading of 75,000. But at least this was in positive territory. Separately, job openings fell by roughly 200,000 from the month before, to 7.35 million. Perhaps the best labor reading was the initial claims category, which dipped below 200,000 last week. The trend reinforces the narrative of a “low hire, low fire” labor market. The lukewarm labor data has now reduced the probability for a Fed rate increase in September to 42% from 55% previously.

Macro readings and other news from the past week

• The Wall Street Journal reported this week that a mere 30% of Americans currently approve of President Trump’s handling of the economy, down from 43% a year ago. Only a third of Americans back his tariffs, which the Journal calls “one of the great self-inflicted policy wounds in recent history.”

• On the trade front, a group of 25 Democratic-led states sued the Trump administration last week. They argued that Trump’s latest round of tariffs, levied on 60 trading partners, exceeds his legal authority. (We were not surprised by this move and thought a lawsuit would eventually be filed by any one of several groups). The states argue that “Trump’s broad-brush approach has no historical precedent” and that the tariffs proposed under “forced labor” provisions are just a pretext to re-impose the tariffs that have already been ruled illegal.

• The July ISM number released last Monday increased to 55.6, the highest reading since May 2022. Reuters notes that “fifteen manufacturing industries, including electrical equipment, appliances and components, primary metals, transportation equipment, machinery as well as computer and electronic products, reported growth last month. The chemical products industry was the only one to report a contraction”. Although many businesses reported an improvement in activity and a return to hiring for the first time in years, the majority expressed concern about rising prices. Some of the most negative comments in the reports came from primary metals producers. One complained that there was “no normalcy in sight,” adding that “it makes me yearn for the coronavirus pandemic chaos, which was more manageable than whatever this is that we are in.”

• What is concerning about the US manufacturing picture is that the bulk of the uptick is coming from AI-related spending. Oxford Economics notes AI spending in the US, coupled with the stock market wealth that has also been generated by the stratospheric rise in AI stocks, are dually responsible for at least one third of US GDP growth. Strip out the stock market gains, and the AI sector accounts for one quarter of that.

• Put another way, a sizable chunk of the economy is heavily reliant on one sector. And it raises legitimate questions as to what will happen if momentum stalls or if AI revenues fall short of covering the massive investment outlays. We know a similar boom and bust occurred during the dot.com era. And although many claim “this time is different,” we have reservations about the ultimate AI endgame. AI will survive. But some of the players – and the technologies they promote – may not.

• US construction spending slipped 0.1% in June and was down 3.2% year on year, with single-family construction falling 0.6% and factory projects down 1.2%. The latest mortgage readings are at 6.66%.

• US non-farm productivity increased at a 1.4% annualized rate in Q2, well above the expected 0.6% gain. Productivity was 2.2% higher year on year, helping keep unit labor costs in check (up 1.3% annualized.)

• US services remained firmly in expansion territory in July, with the ISM index coming in at 54.1. New orders rose to 57.2 from 55.1. However, employment fell back into contraction mode (at 47.4). And the prices-paid index increased to 70.3 from 67.7.

• Overall US imports declined 1.8% during the month, and exports fell 0.9%—narrowing the trade deficit by 5.6% to $73.3 billion. Record goods deficits with Mexico, Vietnam, and South Korea persisted despite higher US tariffs. As a result of the AI investment boom, US computer imports in January-June were particularly strong. They came in at $95.4 billion above year-earlier first half levels.

• US consumer credit increased by $14.2 billion in June (consensus $9.0 billion) following a revised $1.1 billion decline in May.

• Canada’s trade surplus reached a four-year high of C$3.86 billion ($2.75 billion) in June, helped by a 16% jump in metal and non-metallic mineral exports and a weaker Canadian dollar. Export volumes rose 1.1% while import volumes fell 1.5%. Just like in the US, data-center processing equipment was behind the rise in imports.

• German industry continues to recover. June factory orders were up 3.1% month over month. Machinery orders jumped 12.7% while computers, electronics, and optics rose by 23%. Led by autos and transport equipment, industrial production increased by 0.2% for a third consecutive monthly gain. Exports rose 0.9% for a fifth straight month, but shipments to the US dropped 14%.

• China’s exports rose 24% year over year in July while imports increased 27%, leaving a $112.5 billion trade surplus. Exports remained heavily skewed toward advanced manufacturing, up some 41% in January-July. Exports of traditional items, like toys and ceramics, fell by 10% and 28%, respectively.

• The Commerce Department intensified its critical minerals push on two fronts last week. The government announced $3 billion in financing for domestic minerals and battery projects, including a $1.4 billion conditional loan to battery-material producer Sila Nanotechnologies. Separately, exports of lithium-ion battery black mass and tungsten-containing scrap will be restricted for one year as of Aug. 27. The US currently exports nearly 33,000 tons of electronic waste and other recyclable scrap each month as domestic processing capacity remains limited. President Trump also met with a number of mining executives in Washington on Friday.

• Reuters reports Indonesia’s exports of primary and unwrought alloyed aluminum in June more than doubled compared to the same month last year. Indonesia shipped about 106,000 metric tons of aluminum in June. For the January-June period, it exported 421,000 tons, an increase of 63% annually. Most of the metal was shipped to Vietnam, China, and South Korea. A lesser amount came to the US.

We wish all our readers well for the upcoming week.