August markets rally as bond yield surge spreads worldwide, chip prices hit records

August in financial markets was shaped by remarks from Federal Reserve officials. At the Jackson Hole symposium, Kevin Warsh warned that improved summer inflation figures did not yet signal a lasting improvement in underlying trends, a comment that pushed market expectations for a September rate hike from 36% to around 60% within a single trading session.

Despite this, stock markets closed the month higher. The S&P 500 gained about 2.6% and the Nasdaq Composite 3.9%, ending a two-month decline, while the Dow Jones rose 1.3% for its fifth consecutive positive month. South Korea's KOSPI index, which had fallen sharply in July, rebounded about 22% in August, helped by SK hynix's share buyback program. Europe's STOXX 600 also posted its fifth straight positive month. Oil prices rose over the month, while Bitcoin climbed 25%.

Bond yield surge goes global

While the long-term government bond sell-off was largely confined to the US in July, it broadened in August. As the US 30-year yield reached 5.34%, Germany, Canada, the UK and especially Japan saw similar increases, with Japan's 10-year yield hitting its highest level since 1996. France remains under the most pressure, with its 10-year yield exceeding 4.1% for the first time since 2008, against a budget deficit of 5.1% of GDP.

Two international summits

Late August saw two parallel events – a G20 finance working group meeting in Asheville, where the US Treasury Secretary discussed the global debt burden and possible sanctions on Iranian oil exports were debated, and the Shanghai Cooperation Organisation's 25th anniversary summit in Bishkek, where member states signed a declaration against unilateral sanctions and reported progress on several infrastructure projects.

Chip market records

Nvidia's quarterly revenue reached $96.2 billion, beating forecasts, sending its share price up 8.7%. Memory chip prices rose even faster – South Korean DRAM export prices in the first 20 days of August were 401% higher than a year earlier, raising concerns about reduced computer and smartphone supply.