This week might be split into two halves, with reaction to the US-Russia Ukraine peace talks kicking off the opening sessions before markets focus on the Fed’s annual symposium at Jackson Hole in Wyoming. The latter confab has been used historically by Fed speakers to signal upcoming policy changes, although that hasn’t always held true in recent years. We should also get a rate cut from the RBNZ and important inflation data out of Canada, the UK and Japan. Also on the calendar are global PMI business surveys, which can show economic trends months before they appear in official data. These should offer more clues about whether US tariffs are pushing us closer to stagflation.

Presidents Trump and Putin ended their weekend summit in Alaska without securing a Ukraine ceasefire agreement, and seemingly with no concessions from Russia. It appears that the US President has flip-flopped again, also saying that he now wants a rapid peace deal that Kyiv should accept. This is likely to cause volatility in energy markets and obviously the euro could be especially sensitive to this new shift by the White House. Investors were hoping for at least a draft for a ceasefire, so we aren’t going to see much geopolitical risk unwinding, with stocks also impacted. Ukrainian President Zelenskiy is travelling to Washington on Monday for talks that leaders of major European nations will now join so headlines will be watched closely.

As for the Jackson Hole event, Fed officials and Chair Powell will be under an intense spotlight to confirm the current market pricing of a virtually fully priced (85%) 25bps rate cut at their meeting in a few weeks’ time. The Fed is currently battling with the two sides of its mandate, price stability and maximum employment. Most rate setters still worry that tariffs – a one-time boost to prices – will fuel a long-lasting bout of inflation. Meanwhile the labour market could be potentially flirting with recession after the huge recent downward revisions. Powell told us just before that NFP data that he didn’t think the jobs market was getting any weaker. We note there is still one more jobs and inflation report due before the September FOMC. A Powell push back against market rate cut expectations should bolster the dollar and hurt the risk rally, in the short-term at least.

In Brief: major data releases of the week

Wednesday, 20 August 2025

– RBNZ Meeting: The bank is expected to cut the OCR by 25bps to 3.0%. After a pause in July, data has not overly surprised with inflation contained. A data dependent and cautious stance is likely to be maintained.

– UK CPI: July headline inflation is expected to tick up modestly as food and fuel prices have risen. A 4% peak is seen in September by many economists. The all-important services metric is also forecast to increase, and exceed the May MPC projection, though the effects could prove temporary.

– FOMC Meeting: Markets will be on watch for any signs that rate cuts are incoming, even though Fed Chair Powell leaned hawkish in his press conference and pushed back against a September rate move. The meeting had a very rare dissenting vote with Governors Waller and Bowman both voting for policy easing.

Thursday, 21 August 2025

– Global PMIs: Manufacturing remains in contractionary territory across the globe, with recent positive momentum battling against trade uncertainty. Services should continue to stay relatively buoyant.

– Fed’s Jackson Hole Symposium: Will they, or won’t they? The key question is whether Fed officials and Chair Powell confirm a September rate cut and if so, the magnitude of the move. Political pressure is intense but import prices were hot.

Friday, 22 August 2025

– Japan Inflation: Headline national inflation is expected to ease to 3.0% in July. Utility bills have been falling though food costs are forecast to rise. Monthly metrics should bounce back into positive territory due to base effects. 

– UK Retail Sales: Consumer spending could be cautious as sentiment is muted. That said, other measures have pointed to strong food sales due to warm weather, while clothing retailers enjoyed a good July.