ISM Manufacturing PMI

• Manufacturing PMI eased to 54.6% in August, down 1.0 point from July's 55.6% and modestly below the 55.2% consensus, though it marked an eighth consecutive month of expansion for the sector.
• New orders and backlogs both cooled — new orders fell 3 points to 53.7% and backlogs dropped 3.2 points to 51.8% — while employment also softened to 51.2%, even as production held firm at a still-robust 58.3%, suggesting factories are working through existing demand rather than seeing fresh momentum build.
• Only two of the six major manufacturing industries (Wood Products and Chemical Products) reported contraction, with Computer & Electronic Products, Machinery, and Transportation Equipment among those still posting new order growth.

ISM Services PMI

• Services PMI jumped to 55.4% in August, up 1.3 points from July's 54.1% and comfortably beating expectations, extending the sector's expansion streak to 26 consecutive months.
• Business Activity surged 2.6 points to 61.7% and New Orders rose 3.7 points to 60.9% — both well above their 12-month averages — pointing to accelerating rather than merely sustained momentum in the services economy, with respondents citing a back-to-school sales boost.
• The one soft spot was employment, which contracted for a second straight month at 47.8%, meaning the sector is expanding output and orders without meaningfully adding headcount — a dynamic worth watching alongside the labor market's broader recovery signaled by Friday's jobs report.

Employment Report

• Nonfarm payrolls surged 162,000 in August — more than triple the 53,000 consensus and a sharp reversal from July's revised -23,000 contraction — delivering a decisive beat that eases the acute recession anxiety triggered by last month's shock miss.
• The unemployment rate held steady at 4.1%, in line with expectations, while average hourly earnings rose 0.3% month-over-month, matching forecasts and holding the annual pace at 3.1% — signaling wage growth has stabilized rather than reaccelerated or collapsed.
• The strong rebound arrives just ahead of the Fed's September 15-16 FOMC meeting, complicating the case for an aggressive rate cut and reinforcing the view that July's contraction may have been an outlier rather than the start of a genuine labor market downturn.

Jobless Claims

• Initial jobless claims, a measure of how many workers were laid off across the U.S., increased to 206,000 in the week ended August 28, up 2,000 from the prior week.
• The four-week moving average was 207,250, up 1,500 from the prior week.
• Continuing claims — those filed by workers unemployed for longer than a week — increased at 1.779 million in the week ended August 21. This figure is reported with a one-week lag.

Fed's Balance Sheet

• The Federal Reserve's assets totaled $6.737 trillion in the week ended September 4, up $6.3 billion from the prior week.
• Treasury holdings totaled $4.549 trillion, up $3.7 billion from the prior week.
• Holdings of mortgage-backed securities (MBS) were $1.91 trillion in the week, down $17.2 billion from the prior week.

Total Public Debt

• Total public debt outstanding was $40.10 trillion as of September 4, an increase of 7.1% from the previous year.
• Debt held by the public was $32.42 trillion, and intragovernmental holdings were $7.76 trillion.

GDP

• The latest annualized U.S. GDP stands at $32.49 trillion as of June 30, 2026, an increase of 1.95% from the previous quarter, & an increase of 6.56% from the previous year.
• The total public debt-to-GDP ratio is at 121.47% as of June 30, an increase of 2.69% from the previous year.

Inflation Factors

CPI:

• The consumer-price index rose 3.4% in July year over year.
• On a monthly basis, the CPI increased 0.1% in July on a seasonally adjusted basis, after decreasing (0.4%) in June.
• The index for all items less food and energy (core CPI) rose 0.2% in July, after falling 0.0% in June.
• Core CPI increased 2.5% for the 12 months ending July.

Food & Beverages:

• The food at home index increased 2.6% in July from the same month a year earlier, and decreased (0.1%) in July month over month.
• The food away from home index increased 3.4% in July from the same month a year earlier, and increased 0.3% in July month over month.

Commodities:

• The energy commodities index decreased (2.9%) in July after decreasing (9.5%) in June.
• The energy commodities index rose 24.7% over the last 12 months.
• The energy services index rose 0.1% in July after increasing 1.5% in June.
• The energy services index rose 4.3% over the last 12 months.
• The gasoline index rose 24.6% over the last 12 months.
• The fuel oil index rose 39.1% over the last 12 months.
• The index for electricity rose 4.2% over the last 12 months.
• The index for natural gas rose 4.3% over the last 12 months.

Supply Chain:

• Drewry's composite World Container Index decreased to $4,465.11 per 40ft container for the week of September 4.
• Drewry's composite World Container Index has increased by 112.2% over the last 12 months.

Housing Market:

• The shelter index increased 0.1% in July after increasing 0.1% in June.
• The rent index increased 0.1% in July after increasing 0.1% in June.
• The index for lodging away from home decreased (3.4%) in July after decreasing (2.5%) in June.

Federal Funds Rate

• The effective Federal Funds Rate is at 3.63%, down (0.01%) year to date.

Money Market Funds

• Money market fund assets stood at $7.98 trillion as of September 2, 2026, up 0.6% from the previous week, & up 9.9% from the previous year.

Middle East

• Arab Gulf leaders are writing off 2026 as an economic loss with the U.S.-Iran war now in its seventh month, disrupting marquee events (the Bahrain Grand Prix relocated to Malaysia, Riyadh's E-Sports World Cup moved to Paris) and hammering aviation, tourism, and real estate — Dubai International Airport reported passenger traffic down 31% and cargo down 29% year-over-year in H1 2026.
• Dubai's real-estate index has lost roughly a third of its value since before the war, with luxury residential sales down 59% and hotel occupancy falling to 56% from around 80% in 2025, while Wynn Resorts confirmed its $5 billion U.A.E. casino project has faced monthslong delays and hundreds of millions in added costs.
• Newly disclosed details of the Trump administration's civilian nuclear agreement with Saudi Arabia reveal a roadmap that could eventually permit uranium enrichment up to nearly 20% — a level nonproliferation experts warn puts the kingdom "most of the way toward producing weapons-grade material" absent stringent controls.
• Congressional critics note the deal's oversight framework falls well short of the IAEA's Additional Protocol that governed Iran's 2015 agreement, and that consultation periods designed to inform lawmakers could be compressed to days rather than the stated two years, leaving Congress with little real capacity to intervene before the accord automatically takes effect.

Europe

• Eurozone retail sales unexpectedly fell 0.6% month-over-month in July — the largest monthly decline in over a year, versus a forecast 0.3% rise — with Germany hit hardest at -3.4%, as lingering energy-price pressure from the Iran war weighs on consumer spending even as business surveys and consumer confidence hold up.
• German industry offered a partial counterweight, with manufacturing orders up 2.5% in July (a third straight monthly gain) driven largely by transport equipment, though much of the strength reflects stockpiling ahead of Hormuz-related supply constraints — a dynamic that could reverse later in the year, while Volkswagen's approval of 50,000 additional job cuts underscores structural strain in the auto sector.
• Bank of England Chief Economist Huw Pill argued the BOE should raise rates now to limit the risk of prolonged above-target inflation, even as the war's trajectory remains highly uncertain — though he remains in the minority, with only two other MPC members backing a July hike against six votes to hold.
• Pill warned that staying on hold risks markets prematurely pricing in 2027 rate cuts, effectively easing financial conditions when the BOE needs tightening, with UK inflation at 2.9% and expected to rise further as energy costs feed through — setting up a policy divergence as the ECB is expected to deliver its second hike since the war began next week.

China

• A catastrophic mudslide and flooding along the China-Nepal border has killed over 900 in Nepal and 21 in China, with nearly 4,250 still missing, testing whether China's Belt and Road investment in the region — including the destroyed Gyirong Port border crossing — translates into meaningful support when disaster strikes.
• Some Nepali media have questioned whether Chinese infrastructure projects contributed to the flooding or whether Beijing could have issued earlier warnings, highlighting the absence of any formal cross-border early-warning system despite China's advanced satellite monitoring capabilities and years of prior Himalayan disasters originating in Tibet.
• A G-20 finance ministers' statement issued in Asheville, N.C. implicitly criticized China's export-dependent growth model, calling on countries with "excessive and persistent external surpluses" to eliminate nonmarket policies and boost domestic consumption — with China as the sole dissenting nation among all G-20 members.
• The unusually broad consensus, extending even to Russia, reflects mounting global alarm over China's $1.2 trillion trade surplus and manufacturing overcapacity, though analysts caution the statement's deliberately generic language avoids committing signatories to concrete action given fears of Chinese retaliation, such as past rare-earth export restrictions.

Americas

• Argentine President Javier Milei revived Argentina's long-standing claim to the Falkland Islands in a national address, using Trump's suggestion that the U.S. could "review" its position on U.K. sovereignty as an opening to rally nationalist support amid his approval rating sinking to 37% ahead of a difficult 2026 election.
• Milei pledged to sanction oil companies operating offshore near the islands and build a military base at Tierra del Fuego, while the U.K. reaffirmed its commitment as "unwavering" and residents — who voted 99.8% in 2013 to remain British — have shown no appetite for Argentine rule.
• Canada announced a C$4.7 billion ($3.4 billion) deal with Alstom to build 313 new passenger railcars for state-owned Via Rail, marking the first time such coaches will be manufactured entirely in Canada, with production split between suburban Montreal and northern Ontario.
• The investment addresses Via Rail's aging fleet, which the company says is driving up maintenance costs and constraining revenue growth, with the first new cars entering service in 2031 and full fleet replacement by the mid-2030s — following an operating loss of C$375 million in 2025 despite C$736 million in government funding.

Russia / Ukraine

• Ukraine plans to scale up drone pressure near Russian airports to force a full civilian airspace shutdown — with a record 16,000 drones crossing into Russian airspace in August alone, forcing an average of 32 daily airport closures and prompting airlines like El Al, Pegasus, and Flydubai to cancel Moscow routes — while Putin called Zelensky's warning a "declaration of terrorism" and vowed retaliation.

Saudi Arabia

• See Middle East section above for details on the U.S.-Saudi civilian nuclear agreement and its oversight gaps.

Nepal

• The death toll from catastrophic Himalayan flooding in Nepal and Tibet, triggered by a partial glacier and bedrock collapse, has surpassed 900 with nearly 4,250 still missing — many hydropower workers trapped in mud-buried mountain tunnels alongside foreign tourists and pilgrims — as 20,000+ Nepali personnel and international tunnel experts from India, China, and South Korea conduct increasingly perilous rescue operations.

Maldives

• A WSJ investigation found the Maldives has become a covert pipeline for hundreds of millions of dollars in restricted Western dual-use goods — including microchips and aerospace components — flowing to Russia via daily Aeroflot cargo flights, with local middlemen altering shipping documents and Russian import data from the islands surging from under $7 million in 2021 to over $630 million in 2022 despite mounting U.S. and European pressure to close the loophole.

Somalia / Yemen

• A WSJ investigation reveals a deepening alliance between al-Shabaab and Yemen's Houthi rebels — bridging a Sunni-Shia sectarian divide, with Houthis supplying weapons and drone training in exchange for cash — that threatens to destabilize the Gulf of Aden, through which 12% of world seaborne oil passed before the Iran war, with at least 100 al-Shabaab fighters already trained in Yemen and the alliance's key broker killed in a U.S. strike earlier this year.

India

• Female protesters from this summer's Gen Z-led demonstrations over unemployment and education access have faced disproportionate online vitriol — including rape and death threats amplified by BJP social-media workers — after PM Modi called women's use of profanity against him a "cultural shock" while urging forgiveness for male protesters, prompting activists to argue the gendered backlash exploits India's strict social norms to delegitimize the broader movement.

Oil Prices

• WTI: $91.18 per barrel
• +9.33% WoW; +21.70% YTD; +42.54% YoY
• Brent: $95.83 per barrel
• +7.30% WoW; +22.00% YTD; +43.05% YoY

US Production

• U.S. oil production amounted to 13.9 million bpd for the week ended August 28, up 0.0 million bpd from the prior week.

Rig Count

• The total number of oil rigs amounted to 588, flat from last week.

Inventories

Crude Oil

• Total U.S. crude oil inventories now amount to 424.5 million barrels, up 0.9% YoY.
• Refiners operated at a capacity utilization rate of 98.0% for the week, up from 97.4% in the prior week.
• U.S. crude oil imports now amount to 6.158 million barrels per day, down (0.4%) YoY.

Gasoline

• Retail average regular gasoline prices amounted to $4.15 per gallon in the week of September 4, up 29.4% YoY.
• Gasoline prices on the East Coast amounted to $4.06, up 29.8% YoY.
• Gasoline prices in the Midwest amounted to $3.94, up 24.1% YoY.
• Gasoline prices on the Gulf Coast amounted to $3.72, up 30.0% YoY.
• Gasoline prices in the Rocky Mountain region amounted to $4.41, up 33.2% YoY.
• Gasoline prices on the West Coast amounted to $5.33, up 24.7% YoY.
• Motor gasoline inventories were down by 1.2 million barrels from the prior week.
• Motor gasoline inventories amounted to 205.7 million barrels, down (5.9%) YoY.
• Production of motor gasoline averaged 9.85 million bpd, down (0.3%) YoY.
• Demand for motor gasoline amounted to 8.922 million bpd, down (2.1%) YoY.

Distillates

• Distillate inventories decreased by (0.8) million in the week of September 4.
• Total distillate inventories amounted to 104.2 million barrels, down (10.1%) YoY.
• Distillate production averaged 5.126 million bpd, down (2.4%) YoY.
• Demand for distillates averaged 3.390 million bpd in the week, down (10.0%) YoY.

Natural Gas

• Natural gas inventories increased by 30 billion cubic feet last week.
• Total natural gas inventories now amount to 3,214 billion cubic feet, down (1.5%) YoY.

High-yield:

High yield bond yields increased 13bps to 7.30% and spreads widened 2bps to 293bps. Leveraged loan yields increased 10bps to 8.95% while spreads tightened 6bps to 471bps. WTD high yield bond returns were negative 15bps and WTD leveraged loan returns were positive 20bps. High-yield bond & leveraged loan yields rose as rates and oil prices moved higher following renewed U.S. strikes on Iran. Primary markets were closed ahead of Labor Day, secondary trading remained limited. Strong payrolls pushed September rate cut odds below 60%, with next week's CPI/PPI data likely to determine whether that momentum holds. This marks a reversal from the prior week's briefing, when hike odds had been climbing following Fed Chair Warsh's hawkish Jackson Hole remarks — underscoring how quickly the strong August payrolls report shifted rate expectations.

Week ended 09/04/2026

Yields & Spreads¹

Pricing & Returns¹

Fund Flows²

New Issue²

Distressed Level (trading in excess of 1,000 bps)²

Total HY Defaults

Leveraged loans:

Week ended 09/04/2026

Yields & Spreads¹

Pricing & Returns¹

Fund Flows²

New Issue²

Distressed Level (loan price below $80)¹

Total Leveraged Loan Defaults

Default activity:

• Most recent defaults include: Hughes Satellite Systems ($1.5bn, 8/2/2026), Unifrax Investment ($3.1bn, 7/26/2026), Dish DBS ($9.8bn, 6/30/2026), QVC Group ($2.2bn, 4/16/2026), Cumulus Media ($641mn, 03/05/2026), Trinseo ($390mn, 02/17/2026), Beasley Broadcasting Group ($189mn, 02/01/2026), Nine Energy Service ($300mn, 02/01/2026), Multi-Color ($4.5bn, 01/29/2026), and Pretium Packaging ($201mn, 01/28/2026).

CLOs:

Week ended 09/04/2026

New U.S. CLO Issuance²

New U.S. CLO YTD Issuance²

Note: High-yield and leveraged loan yields and spreads are swap-adjusted

¹ Source: Credit Suisse High Yield and Leveraged Loan Index

² Source: JP Morgan

Ratings activity:

S&P and Moody's High Yield Ratings

Source: Bloomberg

Appendix:

Diagram A: Leveraged Loan Trading Levels

Source: Credit Suisse Leveraged Loan Index

Diagram B: High Yield and Leveraged Loan LTM Price

Diagram C: Leveraged Loan and High Yield Returns

Diagram J: New Issue - Leveraged Loan and High Yield

Diagram K: Leveraged Loan + HY Defaults by Sector – LTM

Source: JP Morgan Default Monitor

Diagram L: CLO Economics

Diagram M: Developed Country Govt. Bond Yields (%)

Diagram N: S&P 500 Historical Multiples

Source: S&P Capital IQ

Diagram O: U.S. Middle-Market M&A Valuations (EV/EBITDA)

Source: Pitchbook

Diagram P: U.S. Large Cap M&A Valuations (EV/EBITDA)

Source: Pitchbook

Diagram Q: Dry Powder for All Private Equity Buyouts ($B)

Diagram R: Dry Powder for All US Debt ($B)

Diagram S: Structured Credit Spreads

Source: Bloomberg

Diagram T: Structured Credit Yield

Source: Bloomberg

Diagram U: SOFR Curve

Diagram V: CMBS Spreads

Source: Bloomberg