Week to date since August 19, 2026 as of August 26, 2026

^{Index definitions: Global Real Estate = FTSE EPRA/NAREIT Developed Index; Global Infrastructure = Dow Jones Brookfield Global Infrastructure Index; Natural Resource Equities = S&P Global Natural Resources Index; Commodity Futures = Bloomberg Commodity Index; TIPS = Barclays US TIPS Index; Global Equities = MSCI World Index; Real Assets Index = 30% FTSE EPRA/NAREIT Developed Index, 30% Dow Jones Brookfield Global Infrastructure Index; 15% S&P Global Natural Resources Index; 15% Bloomberg Commodity Index, 10% Barclays TIPS Index. Source: Bloomberg, DWS. Past performance is not indicative of future results. It is not possible to invest directly in an index.}

Market commentary

While the DWS LRA Weekly editorial staff would prefer June Carter and Johnny Cash we instead spent the week listening to pontificators air their opinions on whether Fed Chair Kevin Warsh should use his Jackson Hole address to restore confidence in the central bank’s commitment to price stability. The challenge remained evident as July headline and core personal consumption expenditures (PCE) inflation remained slightly elevated at 3.7% and 3.3% year over year, respectively.^[1]​ 30-year Treasury yields recently reached 5.34%, their highest level since the Global Financial Crisis, reflecting persistent inflation, rising government debt and an elevated term premium. Investors therefore looked to Warsh for a clearer assessment of inflation and the labor market after his guarded July press conference left uncertainty around the Fed’s reaction function and even raised questions about the future of its 2% inflation target. A firm commitment to price stability and central bank independence could help stabilize the long end of the Treasury market—which can be viewed as the market’s barometer for long-term inflation, economic growth, and the credibility of monetary and fiscal policy. However, another ambiguous message risked pushing yields higher, particularly as Treasury Secretary Scott Bessent’s proposed purchases of longer-dated bonds and increased bill issuance threatened to blur the boundary between fiscal and monetary policy. These credibility concerns were compounded by an escalation in U.S.-Canada trade tensions. Washington imposed a 50% tariff on Canadian autos, Canada announced that it would double existing counter-tariffs on U.S. steel and aluminum to 50% and apply similar duties to more than 700 American products, including consumer goods and electronics. The retaliation will affect approximately USD 20 billion of annual U.S. exports to Canada, broadly matching the value of the U.S. measures and covering roughly 6% of U.S. exports to its largest trading partner. The dispute illustrated the administration’s willingness to intensify economic pressure against close allies as well as strategic adversaries, adding to inflation risks, weakening an already fragile consumer outlook and increasing uncertainty around the North American growth trajectory.^[2]​

* Warsh’s speech concluded as we went to print. Our take is Warsh honed and clarified his message on inflation tilting more hawkish. He emphasized the need for the Fed to take policy action if it is not confident that underlying inflation is moving to its target “clearly and at sufficient speed” and stated that he is not convinced that summer inflation data shows a material improvement in the trend. Markets have responded by increasing the likelihood of a September to hike up to 57% from just 36% prior to the speech.

In the period under review, real assets outperformed global equities. Global equity performance landed in negative territory as returns were weighed down by the Energy, Consumer Discretionary, and Health Care sectors. Conversely, the top performing sectors were Materials, Financials, Communications, and Real Estate. Within Real Assets, the Natural Resource Equities sector outperformed, while the U.S. TIPS (U.S. Treasury Inflation-Protected Securities), Global Infrastructure, Global Real Estate, and Commodity Futures sectors underperformed despite generating positive returns. Across other market indicators for the period, the VIX, a measure of 30-day expected stock market volatility, rose 2.1% to end the period at 15.21. Breakeven yields, a measure of implied inflation, rose 4 basis points (bps) in the 5-year and 2 bps in the 10-year segments. Gold prices rose 1.7% to end at $4,591/ounce. Oil prices fell 2.6% to end the period at $82.23/barrel. The U.S. dollar strengthened 0.3% against major trading partners in the period. Credit spreads tightened 1 bps for investment grade credits and 6 bps for the high yield space.^[2]​

Why it matters: The macro environment remained resilient as inflation continued to moderate, with import prices suggesting reduced pressure on inflation in the coming months. We continue to monitor the data to see if changing monetary and fiscal policy and political tensions will prove to be a major stumbling block for the trajectory of the global economy. 

This week we will review the latest indicators covering prices (inflation), sentiment, and GDP. 

• Prices: U.S. headline PCE inflation rose 0.2% month over month in July, marginally above consensus, primary due to rounding. Core PCE increased by 0.2%, meeting consensus expectations. Annual headline and core inflation held at 3.7% and 3.3%, respectively. The readings kept a September Fed hold in play, particularly with next month’s benchmark revisions potentially lowering the core rate.^[1]​
• Sentiment: U.S. consumer confidence slipped to a seven-month low of 89.4 in August, with the Expectations Index remaining in recession-warning territory as households grew more concerned about future business conditions, employment, and income growth.^[3]​ In contrast, Germany’s Ifo index rose for a fourth consecutive month to a 12-month high of 88.8, signaling firmer momentum, although elevated energy prices, trade tensions, and slow reform implementation continue to cloud the outlook.^[4]​
• GDP: U.S. second-quarter GDP growth was unrevised at a 1.5% annualized rate, while Germany’s final estimate was raised to 0.3% quarter over quarter, lifting annual growth to 1.0%.^[1]​ Germany appears on track for its strongest annual expansion since 2022 as infrastructure investment reaches the real economy, but prolonged Middle East tensions, elevated energy costs, and transport disruptions remain material near-term risks.

Real Assets, Real Insights: This week we look at European data center expansion, North American electric supply, and the strength in copper prices.

• Networking (Real Estate): Digital Realty began construction of ZUR4 at its Glattbrugg campus near Zurich, adding 15 MW of IT capacity across approximately 6,300 square meters to support high-density AI and machine-learning workloads. The renewable-powered facility will expand Switzerland’s leading connectivity hub, should strengthen local data sovereignty and resilience, and connect customers to the company’s global platform of more than 300 data centers worldwide.^[5]​
• Power (Infrastructure): The escalating U.S.-Canada trade dispute is threatening cross-border electricity flows, with Ontario considering a 25% tariff or potential halt to power exports after new U.S. tariffs took effect. Reduced or tariffed Canadian electricity imports would primarily translate into higher utility bills, as New York and New England replace relatively low-cost hydropower with more expensive domestic generation. Reliability should remain adequate under normal conditions, but consumers could face sharper price increases and greater outage risk during extreme weather, alongside higher regional emissions from increased reliance on natural gas-fired power.^[2]​
• Copper (Commodities): Prices edged toward January’s record, with three-month LME futures trading near $14,302/ton, up 15% year-to-date and on track for a ninth consecutive weekly gain, the longest streak since 2020. The rally continues to reflect acute near-term supply tightness, as tariff-related stockpiling has drawn substantial volumes into the U.S. and reduced availability elsewhere, while declining LME inventories pushed prompt copper to a more than $171/ton premium over three-month futures. A weaker dollar and renewed demand for hard assets have provided additional support, although trading remained cautious ahead of Fed Chair Kevin Warsh’s Jackson Hole address, which could influence expectations for U.S. interest rates, inflation, and the dollar; prices are consequently expected to remain elevated and volatile.^[2]​