August 14: Soft Data, Higher Yields

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Update

August 14, 2026 11:23 PM GMT

Global Macro Commentary | North America

Morgan Stanley & Co. LLC

Aryaman Singh

Strategist

August 14: Soft Data, Higher

Yields

Lingdi Xu

Economist

Sofia Palacios

Strategist

US retail sales fell 0.6% m/m in July; UMich sentiment fell to

51.0; Brent rose 1.7%; German 30y +8.8bp; BRL weakened 0.7%;

DXY at 99.67 (-0.3%); US 10y at 4.69 (+5.0bp).

Gek Teng Khoo

Strategist

Soft US consumption data initially supported the front end, but higher oil and a

Morgan Stanley MUFG Securities Co., Ltd.+

broader long-end sell-off ultimately left global curves steeper while the dollar

Hiromu Uezato

weakened and risk assets softened.

Developed Markets

Morgan Stanley Asia Limited+

Strategist

Morgan Stanley Asia Limited+

Luyao Liu

• US rates bear-steepened (2y: +2.7bp; 30y: +4.7bp), with the 10y selling

off 5.0bp to 4.69% despite a weaker-than-expected July retail sales

report. Headline sales fell 0.6% m/m against expectations for a 0.1%

increase, while sales excluding autos fell 0.3% against expectations for a

0.2% gain. Control-group spending also fell 0.4%, reinforcing evidence that

Strategist

Morgan Stanley & Co. International plc+

Jasper Knyphausen

Strategist

household demand had lost momentum after stronger spending earlier in

the year. Treasuries initially rallied following the release, led by the front

end, before reversing as the global rates sell-off gathered pace later in the

session. The preliminary University of Michigan sentiment index

subsequently fell to 51.0 from 55.2, while market pricing continued to move

away from a Fed hike in 2026.

• Higher energy prices complicated the rates reaction to the softer US data,

with Brent rising 1.7% to $88.52/bbl and WTI gaining 1.4% to $82.40/bbl.

Oil remained supported as progress toward reopening the Strait of Hormuz

stayed limited and US officials signaled additional economic measures

against Iran. The inflation channel was visible in breakevens, which widened

more at the front end (2y: +4.4bp; 30y: +1.5bp). US equities edged lower

(S&P 500: -0.2%; Nasdaq: -0.3%), although the VIX declined 2.6% to 14.25.

…