In this paper, we examine the dynamics of an isolated capsule using a hybrid lattice-Boltzmann/ finite-element method, with a focus on how the capsule dynamics affects the rheology of capsule suspensions. We study initially spherical capsules undergoing a "tank-treading" behavior in which the particle assumes an ellipsoidal shape at a steady orientation while the capsule's membrane rotates. Of particular interest is the calculation of the particle pressure and a full characterization of the normal stresses. To date, results on capsule rheology only consider normal stress differences, which are insufficient to explain particle migration using the suspension balance model ͓P. R. Nott and J. F. Brady, "Pressure-driven suspension flow: Simulation and theory," J. Fluid Mech. 275, 157 ͑1994͔͒. We also extend the results of R. Roscoe ͓"On the rheology of a suspension of viscoelastic spheres in a viscous liquid," J. Fluid Mech. 28, 273 ͑1967͔͒ using the solution for ellipsoidal particles of G. B. Jeffery ͓"The motion of ellipsoidal particles immersed in a viscous fluid," Proc. R. Soc. London, Ser. A 102, 161 ͑1922͔͒ to predict the particle-phase pressure of deformable particles. Both analytical modeling and numerical results show a negative ͑tensile͒ particle pressure, in contrast with the case of an isolated sphere, which shows no particle pressure.