18/08/2025 Daily Reports
As Fed Chair Jerome Powell prepares to speak at the annual Jackson Hole symposium, markets are watching closely. Here are the big issues on the table:
Tariffs & Inflation:
• Are tariffs really pushing prices higher, or are companies absorbing the costs?
• CPI data shows muted goods inflation, despite tariffs.
• Retail inventories and margins suggest a mixed picture.
The Jobs Market:
• Payroll revisions show potential cracks in the labor market.
• Powell argues unemployment is still a better measure than payrolls.
• But weak hiring surveys and stagnant wage growth raise concerns.
September’s Fed Meeting – A Divisive Moment?:
• A 50bp rate cut is being pushed by some policymakers.
• Markets have already priced in a September cut.
• The real debate: how many more cuts will follow this year?
What’s Next?
Powell’s challenge is not only about data, but also about trust. Markets have become extremely sensitive to every word from the Fed. If Powell signals too much caution, risk appetite could fade quickly. But if he sounds too optimistic, he risks underestimating the cracks in the economy. Finding the right balance will define his credibility in the coming months.
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Markets Eye Jackson Hole and Geopolitics
Global markets begin the week with attention firmly on the Jackson Hole symposium, where Fed Chair Jerome Powell’s Friday speech will shape expectations for a September rate cut, currently priced at roughly 85%. A less dovish tone could unsettle equities and bonds, while ECB President Christine Lagarde and BoE Governor Andrew Bailey will also speak. On the geopolitical front, U.S. President Donald Trump’s meeting with Ukraine’s President Zelenskiy in Washington is being watched closely for implications on energy markets and Russia-related risks. Oil prices have eased slightly, and European bond yields continue to rise on growing borrowing needs.
Equities remain firm after another week of gains, with the Dow up 1.7%, the S&P 500 up 0.9%, and the Nasdaq 0.8% higher, all reaching new records. Retail earnings from Walmart, Home Depot, Target, and Lowe’s will be in focus for signs of consumer strength. Rate-sensitive sectors such as homebuilders and cyclicals have outperformed, though their momentum depends on Fed signals and Treasury yields. Asian markets remain buoyant, with Japan and Taiwan at fresh records and Chinese blue chips at a 10-month high.
