Bonds and commodities roiled markets in August beneath a calm equity surface

August 2026 may have looked like another quiet month for stocks, but beneath the surface, commodities staged one of the most powerful rallies in years. Gold climbed 9.7%, silver jumped 15.6%, and agricultural futures posted their strongest monthly gains in half a decade, according to Deutsche Bank's ↗ 0.22% monthly performance review by strategists Jim Reid and Henry Allen.investing

The broad commodity surge, driven by the ongoing closure of the Strait of Hormuz, renewed inflation concerns, and questions about fiscal sustainability in major economies, overshadowed what was otherwise an unremarkable month for equities.

Precious Metals Lead the Charge

Gold's 9.7% gain in August made it one of the best-performing assets of the month, as investors sought protection against rising government borrowing costs, currency credibility concerns, and what Deutsche Bank described as "financial repression" in sovereign bond markets. Silver outpaced gold with a 15.6% advance.investing

The rally in precious metals came as long-dated sovereign yields climbed to levels not seen in years. The 30-year U.S. Treasury yield touched 5.31% on August 18 — its highest since June 2007 — before retreating after the Treasury Department announced increased buybacks of longer-dated securities. Germany's 30-year yield reached 3.81%, its highest since 2011, while Japan's 10-year yield rose 15 basis points as markets priced in further Bank of Japan tightening.cnbc+2

Agricultural Commodities Surge on Supply Fears

Some of the most dramatic moves occurred in agricultural markets. Corn futures rose 16.8%, their strongest monthly performance in five years, while wheat gained 18.3% — its largest monthly increase in four years. Sugar climbed 21.5%, its best month since 2018. Barchart reported that cocoa and world sugar futures each gained more than 20% during the month.barchart+1

Deutsche Bank linked the agricultural rally partly to the continued closure of the Strait of Hormuz, which Iran shut to commercial traffic following U.S. and Israeli strikes in late February, and partly to ongoing El Niño weather disruptions.investing+1

A Deceptive Calm in Equities

The S&P 500 returned 2.7% in August, with the Magnificent Seven gaining 4.4%. The Philadelphia Semiconductor Index ↘ 0.33% rose just 2.0% after four consecutive months of double-digit swings. Brent crude was similarly subdued at the monthly level, gaining only 0.4% despite the Hormuz disruption.investing

Federal Reserve Chair Kevin Warsh's Jackson Hole address pushed 2-year Treasury yields up 11 basis points in a single session, reinforcing expectations that rate cuts remain distant. As Reid noted, September begins with "a more complicated starting point than the headline equity gains suggest."investing