CPR Invest - Defensive - I EUR - Acc ISIN : LU1203018707

The month of August 2026 was marked by concerns over the evolution of long-term 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 security buybacks for longer maturities would be at least doubled for the quarter.
 
The 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, for its part, came in at 2.5%.
 
Business surveys remained generally well-oriented despite high energy prices. In the eurozone, the composite PMI rose for the third consecutive month, reaching 52.1 in August, its highest level since November, driven by German industry. In the United States, the ISM manufacturing index jumped to 55.6 in July, its highest level since May 2022, while the ISM services index held steady at 54.1. The July employment report, however, disappointed, with a loss of 23,000 non-farm jobs and significant downward revisions for previous months, even though the unemployment rate fell to 4.1%, a thirteen-month low, due to a further decline in the participation rate. In Japan, the unemployment rate fell to 2.4% in July, a one-year low, but inflation in Tokyo reached a five-month high in August. China continues to stand out, with PMI surveys falling to a four-month low in July, illustrating the persistent gap between sectors linked to artificial intelligence and the rest of the economy.
 
None of the major central banks held a monetary policy committee meeting in August. The month's key event in this respect 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, saying that the Fed's attention should currently be focused primarily on price stability. In the eurozone, 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. In Japan, several BoJ officials indicated that the central bank should accelerate the pace of rate hikes, with markets now anticipating a strong likelihood of a hike to 1.25% as early as September.
 
Equity markets held up well to oil price volatility, buoyed by renewed strength 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 Eurostoxx 600 also reached a new record before giving up some of its gains, ending the month up 0.3%. 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 driven by technology stocks.
 
Bond yields generally rose 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, on expectations of an ECB rate hike. Sovereign spreads in the eurozone widened slightly. In Japan, the 10-year yield also rose, to 2.92%, in anticipation of BoJ tightening. 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 security buybacks).

The fund rose by 0.46%, compared with 0.19% for the capitalized €STR. The equity allocation was the main driver of performance, contributing +0.50 points. High Yield credit and emerging debt also contributed positively, while Investment Grade credit and sovereign bonds weighed on performance. Equity exposure was increased by 1.22 points, to 23.45% at the end of the month. We selectively strengthened U.S. growth drivers through the Nasdaq, initiated an exposure of around 1% to cloud, and complemented this with an increase in memory stocks. An exposure to the CAC 40 of around 1.1 points was replaced by a similar-sized exposure to the Euro Stoxx 50. Profits were also taken on half of the September-maturity Euro Stoxx 50 calls. On the bond side, sensitivity was reduced from 4.05 to 3.71, notably by reducing exposure to eurozone rates. Positions on U.S. rates, the Schatz, and North American High Yield credit were also rolled. Positioning remains defensive, with a controlled equity budget and a preference for diversified and selective bond carry.

Our central scenario remains one of resilient global growth and a gradual normalization of energy prices, but with inflation still too high to allow for a rapid easing of monetary policies. We maintain a favorable medium-term view on risky assets, supported by earnings, while adopting a more tactically cautious stance in light of real rates and valuations. In equities, we favor geographical diversification and broadening performance drivers, while maintaining selective exposure to artificial intelligence across semiconductors, software, and cloud. In bonds, we maintain short to moderate sensitivity and favor credit carry, with increased selection in High Yield given the tightening of spreads. Gold retains a diversification role, with no increase after its strong rise. The main risk factors remain the evolution of energy prices, the inflation trajectory, French fiscal risk, the weakness of the Chinese economy, and a potential correction in artificial intelligence-related stocks.