CPR Invest - Megatrends - A EUR - Acc ISIN : LU1734693812

The month of August 2026 was marked by concerns over the evolution of long-term interest rates. The deadlock in negotiations between Iran and the United States, punctuated by sporadic attacks, led to continued volatility in oil prices throughout the month, with Brent crude ending at $89 per barrel. The persistence of energy prices at high levels continued to fuel fears of accelerating inflation and thus weighed on bond markets. In response to this rise in long-term rates, U.S. Treasury Secretary Scott Bessent announced that Treasury buybacks on longer maturities would be at least doubled for the quarter. Inflation indices published in August, covering the month of July, delivered a mixed message. In the United States, headline inflation (CPI) slowed to 3.4% year-on-year, compared to 3.5% in June, while core inflation fell to 2.5%, its lowest level of the year. In the eurozone, by contrast, inflation accelerated to 2.9% in July, up from 2.8% in June, driven higher by a renewed surge in the energy component (+10.3% year-on-year) linked to developments in oil and gas prices. Core inflation, meanwhile, came in at 2.5%. None of the major central banks held a monetary policy committee meeting in August. The key event of the month from this perspective was the Jackson Hole symposium, where Kevin Warsh was reassuring about the labor market but concerned about the inflation trajectory. For the first time in his term, he gave guidance by saying that the Fed's attention should currently be focused primarily on price stability. In the eurozone, the ECB minutes suggested that a majority of Governing Council members would be ready to raise key rates in September to contain the effects of rising energy prices.

Bond yields generally increased over the month, particularly at the very end of the month after Kevin Warsh's speech. The U.S. 10-year yield ended the month at 4.74%, its highest level since the start of 2025. The German 10-year yield rose sharply, ending the month at 3.30%, its highest level since 2011, driven by expectations of an ECB rate hike. Sovereign spreads in the eurozone widened slightly. In Japan, the 10-year yield also increased, to 2.92%, in anticipation of a tightening by the BoJ. Finally, gold rebounded strongly, rising 9.6% over the month, its best monthly performance since January, supported by interventionist measures from the U.S. Treasury (intervention on the yen and increased Treasury buybacks).

Equity markets held up well to oil price volatility, buoyed by renewed momentum in the artificial intelligence theme. The S&P 500 set several new all-time highs during the month, approaching 7,800 points before pulling back slightly, ending the month up 2.6%. The DJ Stoxx 600 also reached a new record before giving up part of its gains, finishing the month up 0.5%. The Nikkei rose 3% over the month, still driven by the semiconductor sector. Finally, the MSCI Emerging also posted a solid performance (+3.2%), again supported by technology stocks.

On the thematic side, the Natural Resources theme, up +9.4%, was by far the leader, supported by the rise in gold, in a context of geopolitical tensions, high long-term yields, and occasional dollar weakness. AI, up 6.6%, remained a strong theme with hyperscaler capex (Alphabet, Amazon, Microsoft, Meta, Oracle) revised upwards and exceeding estimates, but raising questions about short-term return on investment. For example, Chinese exports jumped 23.9% year-on-year in July—marking a second consecutive month of growth above 20%—driven largely by global demand for AI-related hardware. The information technology sector recorded the second-best performance within the MSCI World (+6.1%), suggesting that the AI theme held up despite headwinds from interest rates. The Software segment, up 16.4%, benefited from strong results from Salesforce (+40.0%) and CrowdStrike (+21.0%), which reassured investors about demand for enterprise software and cybersecurity. Finally, Defense, up 4.4%, also proved to be a winning theme with accelerated spending in the sector. Northrop Grumman secured framework contracts worth up to $3 billion for missile interceptor components, while the U.S. Army allocated $400 million to anti-drone laser systems. The drone economy is emerging as a full-fledged sub-theme with a performance of 10.3% in August.

In August, CPR Megatrends rose by 1.32% compared to 1.60% for its benchmark index, the MSCI World (EUR). We were slightly overweight in Basic Materials through the Wisdomtree Strategic Metals & Rare Earths Miners ETF, up 16.3%, and Amundi Global Bioenergy, up 4.55%. Around the AI theme, CPR AI was up 2.6%, with our Memory, Datacenter Construction, and Cybersecurity baskets gaining 5.2%, 1.5%, and 12.6% respectively. Finally, we suffered from our exposure to Renewable Energies, a long-duration theme, with KBI Energy Transition and CPR Hydrogen down 2.8% and 2.1% respectively.