Macro Notes: Bond Yields, Inflation, Credibility & Gold
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August 19, 2026 | Since 2024, the US markets have danced to the tune chosen by President Donald Trump, a song of irrational highs and frightening lows that has kept the entire world on edge. Nobody knows what Donald Trump will say or do from one moment to the next, including the commander-in-chief. In this issue of The Institutional Risk Analyst, we ponder the macro view as Trump II nears the halfway point.
Oil prices are up more than 25% since the Iran war began on February 28, 2026. International benchmark Brent crude trades above $91 per barrel, driven by persistent supply constraints and shipping disruptions in the Strait of Hormuz, but prices for diesel fuel and other key oil byproducts are up even more. Heating oil is set to be a major pain point for consumers , driven by tight global diesel supplies, war in the Middle East, and reduced refinery capacity.
The dollar, by comparison, is trading near multi-month lows against major foreign peers, driven down more by softening U.S. economic data and shifting Federal Reserve interest rate expectations than the geopolitical conflict itself.
Gold prices have begun to climb again as it becomes increasingly clear that the Fed cannot and will not do anything to slow the upward creep of producer prices, this despite the verbal intonations from the central bank about fighting inflation. No surprise, global central banks continue to move out of Treasury securities and into gold.
“The most violent oil shock in history came and went inside the first half of 2026,” notes Thomas Roderick, Portfolio Manager at Trium Epynt Macro Strategy. “While the matter is not yet settled, what it revealed matters more for gold than it does for crude… Something has changed in the plumbing of the world economy, and the asset with the most to gain from the change is not oil. It is gold.”
Trump as Lame Duck
Karoline Leavitt, the White House press secretary and one of the most public-facing officials in the Trump administration, announced her resignation last week. The steady flow of officials exiting the Trump Administration suggests that the beginning of the lame duck presidency is about to begin.
With the prospect of the end of Trump II in sight, however, investors are slowly waking up to the fact that much of the economic damage done by President Trump in terms of higher interest rates and inflation cannot easily be undone. What is clear, though, is that the political reaction against four years of Trumpian destruction and general insanity will be broad and powerful, and will continue long after he departs the scene.
If you want to see a likely image of the political future post-Trump, look at conservative Republican governor Brian Kemp and Democratic Senator Jon Ossoff in Georgia. Affordability has become the key issue on Main Street for members of both political parties. Fact is, Donald Trump has presided over the highest level of inflation since President Gerald Ford ran on a platform of repairing affordability in 1976 and lost the Presidency to another Georgia politician, Jimmy Carter.
Take an example from Zohran Mandami’s socialist paradise in New York City. Median Manhattan rent reached $5,000 in July, up 6.4% year over year, according to Miller Samuel and The Real Deal. Available listings plunged more than 39%, the steepest annual decline in a decade. Brooklyn also tightened, with rents reaching $4,500 while inventory fell 27%.
“A growing share of apartments are being marketed through private broker networks, paywalled platforms, or entirely off-market channels, reducing the inventory renters can actually see,” the Real Deal reports. “Some brokers are reportedly charging as much as $4,000 for access to hidden listings.” And rent increases are accelerating in many metros around the country.
And yet even with the cost of living top-of-mind for many Americans, there are signs that the US is sliding into a housing market correction of epic proportions. We’ve been talking about a housing market correction around 2028 since we published our biography of Freedom Mortgage founder Stan Middleman, “Seeing Around Corners," in 2024. Remember Stan's prediction about US home prices: "Misery on the 8s."
Mike Hawthorne writes in Substack:
“In early July 2026, Florida had more than 215,000 active residential listings—roughly one of every seven homes for sale in the United States. Yet Florida contains only about 7.3 percent of the nation’s total housing stock. According to the Parcl Labs data behind those figures, nearly 45 percent of Florida listings had already received a price cut, and more than 10 percent were being offered below the price their owners had previously paid.”
It may just be a coincidence, but it was 100 years ago that the bottom fell out of the Florida real estate market. The speculative bubble in Florida real estate described by John Kenneth Galbraith in “The Great Crash 1929” peaked in 1925 but finally collapsed in September 1926. FL real estate prices did not recover for 50 years. But today, the great speculative bubble is not found in Florida scrub land, but in Wall Street AI stocks and private credit.
The Fed Passes on Inflation – For Now
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