• MON: US Treasury Secretary Bessent on Iran; Mexican Inflation (Aug), US Chicago Fed National Activity Index (Jul)
• TUE: RBA Minutes (Aug), German GDP Final (Q2), German Ifo Expectations (Aug), US House Price Index (Jun), US Richmond Fed Manufacturing Index (Aug)
• WED: Australian CPI (Jul), US PCE (Jul) and GDP 2nd (Q2)
• THU: Fed Jackson Hole Symposium (27-29th), BoK Announcement, German GfK (Sep)
• FRI: Fed Jackson Hole Symposium (27-29th), Tokyo CPI (Aug), Japanese Unemployment Rate (Jul), French and Spanish Prelim CPI (Aug), Canadian GDP (Jul), US Non-Farm Payrolls Annual Revision Prelim

WEEK AHEAD

BESSENT (MON): US Treasury Secretary Bessent is to give an update on Iran on Monday, with the focus on economic sanctions, which he says will collapse the regime and squash the Iranian economy. He suggested coordinated action and warned that if other countries insist on doing business with Iran, the US will enforce actions against them. This could be problematic for China, with Kpler data showing China buys more than 80% of Iran’s shipped oil, according to 2025 data. The scale of the sanctions is expected to be large, given Bessent warned they will be the toughest sanctions in history. Although the sanctions are expected to be tough, Bessent noted that the maximum economic pressure campaign means a kinetic restart is unlikely, showing the administration appears to be focusing on sanctions rather than strikes.

RBA MINUTES (TUE): The RBA Minutes of its August meeting will be released, where the Bank kept its Cash Rate unchanged at 4.35%, as expected, with the decision unanimous. As a reminder, it maintained its hawkish tone as it stated that inflation is still elevated and risks are skewed to the upside, with the central bank remaining focused on preventing high inflation from becoming entrenched and will continue to do what it considers necessary to return inflation sustainably to target, including raising the Cash Rate. It also stated that inflation remains too high and is not expected to return to around the midpoint of the target range until late 2027, with upside risks to that projection. The overall tone from the initial release was seen to be slightly less hawkish than previous, as the central bank noted that financial conditions appeared to be somewhat restrictive and it trimmed some of its CPI forecasts in the quarterly SoMP. It also acknowledged that following three increases since the start of the year, financial conditions were now tighter than previously.

AUSTRALIAN CPI (WED): Monthly CPI is expected to ease to 3.3% Y/Y in July (prev. 3.8%), with Westpac also forecasting 3.3%, alongside a 0.8% M/M rise. Westpac expects holiday travel, auto fuel and some domestic services to drive the monthly increase, while electricity prices provide the main drag. The monthly trimmed mean is expected to rise 0.4% M/M, taking the annual pace to 3.5% (prev. 3.6%). Focus will be on whether underlying inflation continues to moderate, with a softer print supporting the case for the RBA to remain on hold.

US PCE (WED): The consensus expects headline PCE prices to rise by +0.1% M/M in July (prev. -0.1%); the core measure is seen rising by +0.2% M/M (prev. 0.1%), with the annual rate of core PCE seen unchanged at 3.3% Y/Y. In July, headline CPI rose by +0.1% M/M (prev. -0.4%), with the annual rate slipping to 3.4% Y/Y (prev. 3.5%); the core CPI metric printed +0.2% M/M (prev. 0.0%), with the annual core rate down one-tenth to 2.5% Y/Y. Meanwhile, headline PPI was unchanged in July (prev. -0.3%), with the annual rate dropping to 4.7% Y/Y from 5.5%; the core PPI measure rose +0.2% M/M, missing expectations for +0.3%, while the annual rate fell to 4.2% Y/Y from 4.7%. Writing after the CPI and PPI reports, WSJ Fedwatcher Nick Timiraos said that most forecasters were looking for a July core PCE reading of 0.22% M/M, and 3.3% Y/Y, adding that this would imply ‘no wedge’ with the July core CPI (also +0.22%); he noted that portfolio management fees are making a meaningful contribution to the core PCE measure in July. The data will be key in helping to shape expectations for the September FOMC meeting, where pricing for a rate hike has diminished following downside surprises in the latest jobs data, cooling inflation metrics, weak retail sales and a GDP miss. At the time of writing, markets are pricing a 65% probability of a hold vs 50/50 before the July data releases. However, traders may keep some powder dry ahead of Fed Chair Warsh’s appearance at Jackson Hole towards the end of the week (see below for preview).

NVIDIA EARNINGS PREVIEW (WED): Nvidia will report earnings on Wednesday, 26th August at 21:20 BST/16:20 EDT, with the numbers closely watched given its clear leadership in AI and continued benefit from surging CapEx by tech giants. In its last earnings report, Nvidia guided next-quarter revenue to USD 91bln +/- 2%, so a small beat is already more or less baked in and an inline print would likely not move the needle on its own. As desks note, participants and the market want a strong outlook for the next quarter, as that is where the debate over digestion and the durability of AI spending will be settled. CEO Huang previously put the potential revenue from Blackwell and Vera Rubin by end-2027 at USD 1tln, so any update there will also be watched, along with whether demand is broad-based or concentrated among certain buyers. Away from the headline numbers and guidance, margins will also be closely watched. A chunky top-line number combined with falling margins would likely raise questions over whether competition, mix or system costs are starting to bite, so desks argue that gross margin holding around 75% would make the company’s valuation a far easier case to argue. On the other side of the coin, China remains a concern and is not going away, while Trump and Xi are due to meet next month. In the most recent news, small batches of H200 chips have been allowed to enter mainland China, though it is not Nvidia’s most advanced chip. The Information reported that Nvidia (NVDA) was plotting a China comeback with a new AI chip, but the company subsequently denied the report. Regarding expectations, adjusted EPS for this quarter is seen at USD 2.08 and revenue at USD 91.94bln. For the next quarter, profit and revenue are projected at USD 2.35 and USD 103.38bln, respectively, while FY EPS is seen at USD 8.96 and revenue at USD 394.22bln. Looking at the sell-side, Bank of America is modelling revenue of USD 94-95bln, with next-quarter revenue at USD 107-108bln. Moreover, UBS writes that, because many of the debates around AI infrastructure spending, ROI and credit risk are out of NVDA’s hands, it thinks the numbers are more important than the narrative and expects investors to gain greater confidence in a path to USD 15+ EPS in CY27 and USD 20 in CY28. Heading into earnings, Oppenheimer maintains Outperform and a PT of USD 265 and sees upside to quarterly numbers and the outlook, led by Blackwell Ultra. Stifel reiterates ‘Buy’ and a PT of USD 282, expecting a beat and raise, which is the broad consensus.

BOK POLICY ANNOUNCEMENT (THU): There are some expectations that the BoK will raise rates again by 25bps to lift the 7-Day Repo Rate to 3.00% from the current 2.75%. As a reminder, the BoK raised its key rate at the last meeting in July, as expected, which was the first rate increase in 3.5 years. The decision was made unanimously, and the central bank indicated that further tightening remains possible as growth and inflation risks increase. The language from the central bank since then has remained hawkish as former Senior Deputy Governor Ryoo flagged further hikes prior to the end of his term, which finished just this week, stating that as interest-rate policy is conducted ex ante and pre-emptively, there will be an additional hike as they look at the growth and inflation outlook, while he also commented that the durability of price pressures will require continued monetary policy attention. However, his successor, Kwon, was less hawkish as he acknowledged that inflation is exceeding the target but also stated that cautious and flexible policy decisions are needed due to FX volatility and geopolitical risks.

ECB MINUTES (THU): The last meeting saw rates held, as expected. The opening statement was near-enough a reiteration of the approach from June, with no forward guidance or pre-commitment provided and the data-dependent and meeting-by-meeting conditionality kept. The lack of hawkish-tilt in the statement spurred a modest dovish reaction, though this unwound on Brent action at the time. During the press conference, Lagarde declined to give forward guidance, though she did concede that they were giving a ‘framework’, with reference to the above conditionality. Additionally, the decision to hold was a unanimous one, but some members did question whether a hike should have taken place. Finally, post-meeting sources confirmed that a September hike will be under consideration. Overall, the post-meeting narrative remains a data-dependent one, but with a skew towards a September hike. From the Minutes, any insight into the split among the governing council around September, and then just how close any member was to formally dissenting and calling for a hike in July. Within this, how the officials aligned themselves on the lack of overt second round effects and ongoing energy price pressures narratives.

TOKYO CPI (FRI): Tokyo CPI for August is expected at around 1.9-2.0% Y/Y (prev. 2.0%), with Core CPI seen at around 1.9% (prev. 1.9%). Focus will be on whether underlying inflation continues to strengthen, particularly services inflation amid rising wages and continued corporate price pass-through. A firmer-than-expected print would further reinforce the case for BoJ normalisation and another rate hike as soon as next month. Current pricing implies a more than 75% chance of a 25bps hike at the 18th September announcement.

US BLS ANNUAL BENCHMARK REVISIONS (FRI): The BLS publishes its prelim benchmark revisions for the CES survey, alongside Q1 QCEW data. The figure realigns sample-based payroll estimates to the March 2026 benchmark month. The data will have no immediate mechanical effect; official estimates aren’t updated until the final adjustment, which will be included in the February 2027 jobs report. Still, the release will be closely watched as a read on the health of the labour market, and follows a recent run of cooling jobs figures, where a total of 74K downward revisions were reported in the April-May jobs data. Any large revision could unsettle policymakers’ recent narrative on a resilient labour market. At the July FOMC, Fed Chair Warsh said the labour market was “solid” and “steady,” and that job gains have kept pace with the workforce and unemployment; he also framed the labour market as “more or less at equilibrium,” and suggested that the Fed’s near-term focus was on above-target inflation, rather than jobs risks. August’s FOMC minutes also noted that demand and supply were balanced in the jobs market, with unemployment expected to stay near current levels. Meanwhile, recent research from the Cleveland Fed notes that the latest benchmark move (-0.54%) sat only marginally outside the BLS’ normal -0.5% to +0.5% range, with no statistical evidence of a structural break since 1965. It also found past revisions carry some predictive value for future ones, which suggests that the release could help shape traders’ views ahead of the more comprehensive February update. In last year’s revisions, payrolls were revised down by -911k for 2025.

JACKSON HOLE ECONOMIC SYMPOSIUM (27-29 AUGUST): This year’s economic symposium at Jackson Hole has the title “Financial Innovation: Implications for Payments and Policy.” Fed Chair Warsh is due to deliver remarks on 28th August at 10:00EDT/15:00BST, which traders will use to infer the path for near-term Fed policy ahead of the 16th September policy meeting. Previous Fed chairs have used the forum to signal upcoming policy actions. However, Warsh has begun his term with a bias against issuing any forward guidance, and has made the case that such guidance can shackle officials to their earlier forecasts, and his approach of little guidance will allow markets to interpret the data themselves. The approach has led to volatility; his lack of details at the July post-meeting presser unsettled bond markets, prompting a slide in longer-dated maturities. Since the July meeting, expectations of Fed rate hikes have eased following a run of downside data surprises, including a large miss in nonfarm payrolls, cooling inflation metrics, a GDP miss, and soft retail sales. Warsh is likely to reiterate the Fed’s commitment to bringing inflation back to target. Still, some analysts have suggested that the market could again be left disappointed; Saxo Bank’s analysts say the title of the forum suggests that Warsh will deliver thoughts on the potential use of stablecoins for financial system plumbing rather than the Fed’s thoughts on interest rates. Indeed, in July, Warsh told reporters that his remarks will aim to frame the ‘big picture questions’ rather than offer any clues about the near-term path, adding that his Fed is not constrained by market pricing. A recent Reuters poll showed most economists surveyed expect the Fed to keep rates unchanged in September, and through the end of the year; market pricing has moved dovishly after the soft run of data; at the time of writing, markets price around 65% probability of a hold in September vs around 50/50 just a few weeks ago. HSBC said “the debate clearly is about the possibility of rate hikes,” adding that “we’ve gone through the July inflation numbers, and they were basically neutral. On the activity side, the very latest data do show some softening. That could push more FOMC policymakers into the wait-and-see camp rather than in the immediate rate hike camp.”

WEEK IN REVIEW

JAPANESE GDP REVIEW: Japanese Q2 GDP grew at an annualised 1.1%, below expectations of 2.0%, although the economy expanded for a third consecutive quarter. Domestic demand was subdued amid elevated inflation and weaker consumption and investment, while resilient exports, including AI-related semiconductor equipment, provided support. Analysts generally viewed the miss as a complication rather than a barrier for the BoJ, with the economy remaining sufficiently resilient and inflation elevated enough to keep further tightening in play, including a potential September hike.

CHINESE ACTIVITY DATA REVIEW: Chinese activity data disappointed across the board in July, with Industrial Production rising 4.5% Y/Y (exp. 4.8%, prev. 5.3%), Retail Sales increasing just 0.6% (exp. 1.5%, prev. 1.0%) and Fixed Asset Investment contracting 6.7% (exp. -6.2%). Property investment fell 19.2%, while unemployment rose to 5.2%. The data reinforced concerns over weakening domestic demand and China’s continued reliance on exports for growth, increasing pressure on Beijing to provide further monetary and fiscal support.

CANADIAN INFLATION REVIEW Inflation came in slightly hotter than expected in July. Headline rose 3.0% Y/Y (exp. 2.9%, prev. 2.8%) and 0.5% M/M (exp. 0.4%, prev. -0.4%), while core Y/Y rose 2.3%, accelerating from June’s 2.1%. The three watched metrics, Common, Median and Trimmed mean, were above expectations on a Y/Y basis, lifting the BoC average to 2.2% (prev. 2.1%). Gasoline prices were the largest upward mover, rising 25.7% Y/Y in July (June: +20.5%) amid Middle East supply disruptions. Travel tours (+15.2%) and air transportation (+12.0%) also accelerated, while grocery inflation slowed to +3.1% (June: +3.9%) but remained above headline CPI for an 18th consecutive month. Oxford Economics notes that excess slack in the economy and a further deceleration in shelter inflation will likely keep core inflation near the BoC’s 2% target this year, allowing the BoC to stay on the sidelines.

UK JOBS REVIEW: Overall, the series doesn’t show a significant change in the labour market, a point that was expected heading into the release. Initial focus on the hotter-than-expected headline wage metrics, including the upward revision to the measure with bonuses. Within this, it is worth highlighting the split between public and private pay, with the public sector still well ahead at 6.1% vs 2.8% for the private sector, the latter was a marginal dovish surprise. Additionally, the claimant count unexpectedly declined and the prior was revised down. However, this is offset by the unemployment rate unexpectedly remaining at the prior 4.9% level (exp. 4.8%) and the 3M employment change printing below the prior. A dynamic also seen in the reaction, with GBP initially lifting before paring and moving below pre-release levels, action also somewhat explained by the private pay component and weak payrolls for both the current and prior, revised, series. For the BoE, the data keeps the extended hold narrative in play, and arguably factors in favour of the dovish side of the MPC.

UK INFLATION REVIEW As expected, the headline ticked up to 2.9% Y/Y (prev. 2.6%) and above the BoE’s 2.8% view, while the core remained at 2.6% Y/Y, defying consensus for a moderation to 2.5%. In short, the data does not change the extended hold narrative for the BoE, as the upside was driven by the Ofgem price cap adjustment, a point that overshadowed the drop in crude and petroleum prices in the period, alongside a marked moderation in food. Elsewhere, the Services measure moderated to 3.4% Y/Y (prev. 3.6%), a welcome point for the BoE, but not to a degree that changes the narrative, particularly as this was skewed by the airfares component. Policymakers will continue to look to survey data and upcoming hard data points for insight into any signs of second round effects. Ahead, we look to see how the unwinding of the airfare, VAT and removal of the Ofgem influence net-out in the August series and by extension frame the backdrop into September’s BoE.

FOMC MINUTES REVIEW The FOMC Minutes were largely as expected, as they noted that most participants at the July confab supported keeping interest rates unchanged, while several favoured an increase, as we know due to the three hawkish dissenters and following commentary. Within those dissenters, a few participants judged doing so would likely help forestall the need for further hikes. Most participants assessed higher rates would likely be necessary if inflation did not fall, but that is a pretty consensus view given recent rhetoric and the importance the Committee has stressed of getting inflation back to target. Almost all FOMC members agreed it was appropriate to retain the policy statement affirming FOMC ‘will deliver price stability’, but no caveat was issued into what the others saw or the reasoning. Fed staff economic outlook showed the inflation outlook was like the one prepared for the June meeting, but the economic outlook was ‘a touch weaker’. On the meeting schedule, Chairman Warsh said six scheduled meetings per year, held roughly every two months, would allow more information to accumulate between meetings, but no decision was made and Warsh indicated no change to the 2026 schedule. All in all, the latest Minutes were dwarfed by recent data, which has no doubt been dovish and shifted money market pricing to favour a hold instead of a hike. One of the unknowns remains the US/Iran war. Nonetheless, Pantheon Macroeconomics notes, as things stand, it is unlikely any other FOMC members will be joining the three hawks, and they continue to think that a majority of members will vote to keep policy unchanged through the fall and winter, as the labour market stays weak and domestically generated inflation continues to cool.

RIKSBANK REVIEW: The Riksbank maintained its policy rate at 1.75%, as expected, while the accompanying commentary largely reiterated the prior meeting, when policymakers assessed that the possibility of a rate increase later this year remained. The Bank said that if inflation continued to rise beyond the summer months, it would begin to tighten monetary policy. However, the release also contained some dovish elements, which spurred some pressure in the SEK at the time. Riksbank acknowledged the recent rebound in domestic GDP, though said that “overall, the outlook for the economy remains largely unchanged”. Adding to these concerns, the Bank said that “labour market developments have been somewhat weaker than expected”. Overall, the Bank left the door open to further tightening this year, with policymakers focused on the uncertainty and risks surrounding inflation. Following the meeting, SEB and Nordea both reiterated their calls for rates to remain steady for the remainder of the year, but highlighted the elevated uncertainty. Markets will await the Riksbank Minutes next Wednesday for further clues on how policymakers view the inflation outlook. PBOC LPR REVIEW: The PBoC maintained its 1yr LPR at 3.00% and 5yr LPR at 3.50%, as expected, despite the recent deterioration in Chinese activity data. Policymakers remain constrained by already-low commercial bank margins and continue to favour fiscal support over aggressive monetary easing. Nonetheless, recent economic weakness has maintained expectations for further policy support, with some analysts looking for a rate cut later in Q3.

JAPANESE TRADE BALANCE REVIEW: Japan recorded a JPY 634.5bln trade deficit in July (exp. JPY 680bln deficit, prev. JPY 409.9bln deficit), marking a third consecutive monthly deficit. Exports surged 23.2% Y/Y (exp. 19.9%), supported by strong semiconductor and technology-related shipments, while imports rose 27.8% amid elevated energy costs. Overall, robust external demand provided an encouraging signal for the Japanese economy despite the wider deficit and continued pressure from higher import costs.

AUSTRALIAN JOBS REPORT REVIEW: Australian employment unexpectedly fell by 15.8k in July (exp. +11.7k, prev. +76.3k), while the Unemployment Rate rose to 4.5% (exp. 4.4%, prev. 4.4%) and the Participation Rate eased to 66.9% (prev. 67.0%). The decline was driven by a 32.2k fall in part-time employment, while full-time employment rose 16.3k. Overall, the report pointed to a gradual cooling in the labour market and reinforced expectations for the RBA to remain on hold, although resilience in full-time employment tempered the weakness in the headline print.

JAPANESE CPI REVIEW: Japanese CPI accelerated in July, with headline inflation rising to 1.9% Y/Y (prev. 1.6%), Core CPI at 1.8% (exp. 1.8%, prev. 1.6%) and Core-Core CPI at 1.9%. Higher energy and import costs contributed to the acceleration, while services inflation also edged higher amid continued wage pass-through. The data reinforced expectations for further BoJ normalisation, with some analysts seeing scope for the next rate hike as soon as September.

UK RETAIL SALES REVIEW: A larger-than-expected moderation in retail activity as the initial summer strength faded, amid the end of the World Cup, heatwave impacting in-person activity and ongoing supply shortages. However, the narrative of a robust retail backdrop remains, though it remains to be seen if this is a ‘Burnham Bounce’ or something more substantial. For the BoE, the data does not change the narrative.

EZ FLASH PMI REVIEW: The EZ-wide release was stronger than expected, and saw the Manufacturing and Composite lift further into expansionary territory while Services remained at the prior level. Internal commentary pointed to encouraging signs of rising AI-related demand and defence-related spending, alongside increasing tourism boosting regional activity. Alongside this, elevated prices continue to impact demand, but pressures do show signs of easing. Overall, the data keeps the ECB positioned towards a September hike, as the economy is robust enough to absorb the tightening required to deal with stubborn price pressure. Albeit, economic conditions are not necessarily indicative of a unanimous decision, at this stage at least. Note, the regional breakdown saw further pressure in German Services, which unexpectedly slipped deeper into contractionary territory, though the commentary is indicative of an improvement ahead. For France, where Services were also weak, the recent extreme heat seemingly factored alongside an uptick in associated price pressures.

UK FLASH PMI REVIEW: Stronger than expected for Services and Composite, though the level of Manufacturing expansion moderated in-line with consensus. Data that sparked modest Gilt pressure and limited GBP strength. Internal commentary from S&P outlined that businesses are feeling the most confident since the Middle East conflict commenced, and job losses are seeing a moderation. Overall, the series is indicative of 0.3% GDP growth in Q3, vs 0.4% in Q2. For the BoE, the data keeps the extended hold narrative alive, while the price component uptick also keeps the modest hawkish skew intact, despite the dovish impulses dominating at the last BoE.