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Bond Yields, $40T, LEI Rises, and Aunt Thelma

  • Writer: Doug MacGray
    Doug MacGray
  • 1 hour ago
  • 4 min read

August 24, 2026


BONDS TAKE CENTER STAGE: Investors were watching the bond market carefully this week. As you can see below, the overall bond market has been treading water this year, and it decreased again last week. In last week's MacGray Matter, we discussed the U.S. selling some European debt to buy Japanese debt in order to prevent Japan from selling its U.S. bonds. This week, the U.S. Treasury acted again by announcing plans to at least double its plans to buyback longer-term U.S. bonds (to over $4 billion). This happened after long-term yields rose again earlier in the week. Bonds have a stated interest or coupon rate, but if the bond is sold on the open market for less than its par or face value, the buyer gets more than the stated rate. For example, if you buy a bond with a $1,000 par value with a coupon rate of 5%, then your yield is 5%. If you sell that bond to someone for $950, then that same interest rate will "yield" 5.3% for that buyer. Earlier this past week, the 30-year Treasury yield peaked at 5.327%, the highest since 2007. (The yield on the 10-year Treasury note increased to 4.7%.) This means that investors were dumping their long-dated Treasury debt, causing yields to rise. This affects overall interest rates, including mortgages and the amount corporations have to pay to service debt. It also increases the costs to the U.S. government to service its massive debt. Bond investors are concerned about inflation, rising federal debt, and rising corporate borrowing to fund AI investments.


STOCKS PULL BACK: It was a red week across the U.S. equity markets. After a strong summer run, investors are digesting their gains and the recent upward momentum paused. Rising yields on U.S. Treasury debt caused some concern among investors, as much of the continuing growth in the tech sector requires corporations to borrow money to invest in things like data centers and new manufacturing facilities. If interest rates rise, corporate earnings will likely decrease. Continued tension in the Middle East and rising oil prices didn't help. U.S. stock markets rallied on Friday, but it was not enough to get back in the black for the week.



LONGER-TERM PERFORMANCE: Below are the annualized three-year and five-year numbers for these same indices.



$40 TRILLION: The U.S. government debt level rose to above $40 trillion for the first time last week. The symbolic threshold breakthrough triggered some understandable angst amongst investors. It is time to reverse that trend. If the U.S. government ever took legitimate steps to begin to address this issue, markets would rise significantly.

HOUSING STARTS DECLINE: The U.S. needs more housing, but housing starts have been decreasing since March of 2022 when the Federal Reserve began raising rates. In July, housing starts declined by 12.4% (after increasing in June), and were 13.5% lower than one year ago. Homebuilders face a real challenge to build affordable homes in the current environment. Since the Iran conflict, mortgage rates and energy costs have risen, causing more difficulties for homebuilders.


U.S. INDUSTRIAL PRODUCTION CONTINUES TO RISE: In July, industrial production (a measure of activity in mining, manufacturing, and utility companies) rose by 0.2%. All three subcategories rose.


LEADING ECONOMIC INDICATORS RISE: The Conference Board keeps a Leading Economic Indicators Index(r). It measures data points that it believes help to indicate whether the near future will see growth or decline. That index increased by 0.2% in July after a decline of 0.1% in June. Over the past six months, the LEI's growth rate has been positive. This is the first time the LEI's six-month growth rate has been positive in four years. The indicator that remained negative was consumer sentiment. This indicates that the economy is poised for moderate growth over the next six months, but the growth will likely come from industrial activity, not consumer spending.


NEW OLD PICTURE: My father was one of ten children (he was number six), and so I grew up with lots of uncles, aunts, and cousins. Recently, this picture was shared with me. It is from 1923, before my father was born. Those three little kids in the front and the baby being held are my aunts. This was a family vacation to New Hampshire. All of these people (my grandparents, great-grandparents, and others) piled into this one car. Of the three little girls at the front, the one on the right is my Aunt Thelma. She is no longer living, but she described this picture to my cousin, who shared it with us.



Have a great week!


Our purpose is to honor God by helping our clients see the objective, find the path, and navigate past the obstacles to a more prosperous future.



Douglas R. MacGray, J.D., C.F.P. ®

President

Stonecrop Wealth Advisors, LLC

Direct | Cell | Fax

(610) 628 4545




"A people that values its privileges above its principles soon loses both." Dwight D. Eisenhower*


"For we brought nothing into the world, and we can take noting out of it. But if we have food and clothing, we will be content with that." I Timothy 6:7-8 (NIV)


*In commemoration of the 250th anniversary of the United States, I am finding a quote from a president each week, in order. This is the 34th week, and Dwight D. Eisenhower was our 34th president.


SOURCES:


(c) 2026 Anno Domini, Stonecrop Wealth Advisors, LLC, All Rights Reserved


Investment advisory services offered through Stonecrop Wealth Advisors, LLC, a Registered Investment Advisor with the U.S. Securities and Exchange Commission.


SDG

*S&P 500: This is a measure of the performance of the 500 largest companies in the United States, and it a common index to track the performance of U.S. equity markets, especially the large cap markets.

*MSCI All Country World Index X US: This is a broad measure of the performance of worldwide equity markets excluding the United States.

*Bloomberg U.S. Aggregate: This is a measure of the U.S. bond markets.

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