The State of Markets: “Powell & Jackson Hole”
“shifting balance of risks may warrant adjusting policy”; “situation suggests that downside risks to employment rising”
Source: Chair Powell, Jackson Hole speech, 22nd August 2025
After a week of nervousness, Powell gave the markets what they wanted on Friday with a directionally dovish shift in his tone. Whilst some will argue that the committee remains balanced, retaining some nervousness about the tariff inflation risk, it’s clear they are also now concerned about the labour market (see quotes above).
The markets duly took their cue (from Powell). Fed fund futures priced in more cuts by year end. The probability of a September 25bps rate cut increased to 89.3% from 75% yesterday (according to CME FedWatch). For the December meeting, the chances of 3 cuts (by the end of that meeting, i.e. including the Sept & Oct meetings) was 39.8%, up from 25.4% yesterday (see chart). With that, equity markets rallied (back to intraday highs) and bond yields fell.
Next week, the key feature will be Nvidia’s earnings release (Wednesday after hours). Elsewhere in Europe, German IFO, a closely watched indicator of the economy’s outlook, is published on Monday; EZ M3 money supply is out on Thursday; while European inflation data (first estimates for various countries for August) is due out on Friday. Over in the US, various pieces of US macro data are published throughout the week including durable goods orders & consumer confidence (Tuesday), pending homes sales (Wednesday), & Chicago PMI (Friday).
For full details, by key region, please see below.
Key chart: Target Rate Probabilities for the 10th December ’25 Fed meeting (%)
Upcoming important data/events this week:
|
Events: |
Bank holiday in UK/England – Markets closed (Mon). |
|
Monday: |
US new home sales (July, 3pm); German IFO business climate (Aug, 9am). |
|
Tuesday: |
US durable goods orders (July first estimate, 1:30pm); US Conference Board consumer confidence (Aug, 3pm). |
|
Wednesday: |
N/A |
|
Thursday: |
Eurozone M3 money supply, including monthly loans to businesses and households (July, 9am); US GDP (Q2 second estimate, 1:30pm); pending home sales (July, 3pm). |
|
Friday: |
US Chicago PMI (Aug, 2:45pm); German, French, Spanish & Italian headline CPI (August first estimates). |
|
Key earnings: |
NVIDIA (Wed); Alibaba (Fri); ICBC, Agricultural Bank of China (Sat).
|
Key Research
Longview on Friday, 22nd August 2025:
“AI Capex – How Economically Significant?”
Next week, Nvidia is set to report Q2 quarterly earnings (after hours on Wednesday). The consensus is for earnings of $1.00 up from $0.68 (last year) and sales revenue of $45.6 billion (up from $30 billion last year).
A quick glance at Nvidia’s revenue growth (chart below) illustrates why it’s such a stock market darling. Expected quarterly revenues of $45.6 billion are up 50% on last year; & approximately triple the level of the same quarter 2 years ago in 2023.
Whilst most investors will be watching to see how the company fares relative to expectations, and with respect to its outlook, economists will be interested in the capex signals they can glean from the earnings release and the earnings conference call.
Key North American macro data & events:
|
Events: |
Speeches by the Fed's Logan at Bank of Mexico Centennial Conference (Mon, 8:15pm), Williams gives keynote remarks (Tues, 12:15pm), Barkin on the Economy (Tues, 5:01pm) & Waller on Monetary Policy (Thurs, 11pm). |
|
Monday: |
Chicago Fed national activity (July, 1:30pm); US new home sales (July, 3pm); US Dallas Fed manufacturing sector activity (Aug, 3:30pm). |
|
Tuesday: |
US durable goods orders (July first estimate, 1:30pm); US Philadelphia Fed service sector activity (May, 1:30pm); US FHFA house price index (June, 2pm); US S&P/Case-Shiller 20-city & national house prices (June, 2pm); US Conference Board consumer confidence (Aug, 3pm); US Richmond Fed manufacturing & services index (Aug, 3pm); US Dallas Fed service sector activity (Aug, 3:30pm). |
|
Wednesday: |
N/A |
|
Thursday: |
US GDP, including corporate profits (Q2 second estimate, 1:30pm); US weekly jobless claims (1:30pm); pending home sales (July, 3pm); US Kansas City Fed manufacturing sector activity (Aug, 4pm). |
|
Friday: |
US personal income & spending including headline & core PCE (July, 1:30pm); US trade balance, exports & imports (July, 1:30pm); US wholesale & retail sales & inventories (July, 3pm); Canadian GDP (June, 1:30pm); US Chicago PMI (Aug, 2:45pm); US Michigan Sentiment (August final estimate, 3pm). |
|
Key earnings: |
PDD Holdings DRC (Mon); Bank of Montreal, Bank of Nova Scotia (Tues); NVIDIA, CrowdStrike Holdings, National Bank of Canada, Dollarama (Wed); Toronto Dominion Bank, Canadian Imperial Bank, Dell Tech, Marvell, Autodesk (Thurs). |
Fig B: US Conference Board consumer conference index
Key European macro data & events
|
Events: |
ECB's Villeroy speaks in Bordeaux (Tues, 11:45am); ECB publishes minutes from of July meeting (Thurs, 12:30pm); ECB's Guindos speaks in Pamplona (Fri, 10am). |
|
Monday: |
Spanish PPI (July, 8am); German IFO business climate (Aug, 9am). |
|
Tuesday: |
French consumer confidence (Aug, 7:45am). |
|
Wednesday: |
German GfK consumer confidence (Sep, 7am). |
|
Thursday: |
Eurozone new car sales (July, 5am); Eurozone M3 money supply, including monthly loans to businesses and households (July, 9am); Italian ISTAT consumer & manufacturing confidence (Aug, 9am); Italian industrial sales (Mar, 10am); Eurozone consumer confidence (August final estimate, 3pm). |
|
Friday: |
German import price index (July, 7am); German retail sales (July, 7am); French GDP & consumer spending (Q2 final estimate, 7:45am); French headline CPI (August first estimate, 7:45am); French PPI (July, 7:45am); French private sector payrolls (Q1 final estimate, 7:45am); Spanish CPI (August first estimate, 8am); Spanish retail sales (July, 8am); German unemployment (Aug, 8:55am); Italian GDP (Q2 final estimate, 9am); ECB 1 & 3 year CPI expectations (July, 9am); Italian headline CPI (August first estimate, 10am); German headline CPI (August first estimate, 1pm). |
|
Key earnings: |
N/A |
Fig C: German headline & core CPI (Y-o-Y %)
Key UK macro data & events
|
Events: |
Bank holiday in UK/England – Markets closed (Mon). |
|
Monday: |
N/A |
|
Tuesday: |
BRC shop price index (Aug, 12:01am). |
|
Wednesday: |
CBI distributive trade survey (Aug, 11am). |
|
Thursday: |
N/A |
|
Friday: |
Lloyds business barometer (Aug, 12:01am); Nationwide house prices (Aug, 7am). |
|
Key earnings: |
N/A |
Fig D: Lloyds Business Barometer employment outlook (Net Balance %)
Key Asia-Pacific macro data & events
|
Events: |
RBA minutes of August policy meeting (Tues, 2:30am); BOJ board Nakagawa speech in Yamaguchi (Thurs, 2:30am). |
|
Monday: |
Japanese ESRI leading index (June final estimate, 6am). |
|
Tuesday: |
N/A |
|
Wednesday: |
Australian Westpac leading index (July, 1:30am); Australian CPI (July, 2:30am); Chinese industrial profits (July, 2:30am). |
|
Thursday: |
N/A |
|
Friday: |
Japanese jobless rate (July, 12:30am); Japanese core CPI (Aug, 12:30am); Japanese retail sales (July, 12:50am); Japanese industrial production (July first estimate, 12:50am); Australian private sector credit (July, 2:30am); Japanese housing starts (July, 6am); Japanese ESRI consumer confidence (Aug, 6am). |
|
Key earnings: |
ENN Energy (Mon); PetroChina (Tues); Ping An Insurance, Meituan, Zijin Mining Group (Wed); China Life Insurance, CNOOC, Wuliangye, China Citic Bank, Pudong Development Bank (Thurs); Alibaba, Industrial Bank, CITIC Securities, BOC Hong Kong, Guotai Junan Securities (Fri); ICBC, Agricultural Bank of China, China Construction Bank, Bank of China, China Merchants Bank, BYD Co Ltd-H, China Shenhua Energy, China Yangtze Power, Midea Group, Bank of Communications Co Ltd (Sat). |
Fig E: Australia headline & core CPI (Y-o-Y %)
This week:
Longview on Friday, 22nd August 2025:
“AI Capex – How Economically Significant?”
Longview Letter No. 150, 21st August 2025:
“Drivers of Global Sector Leadership a.k.a. Sector Rotation - Entering into the ‘Sunlit Uplands’”
Longview ‘Tactical’ Alert No. 93, 19th August 2025:
“US Equity Market: Six Warning Signs”
Daily Dose of Macro & Markets:
Daily Dose of Macro & Markets 21st August 2025:
“UK Inflation: Under the Bonnet –> Better Than Expected”
Daily Dose of Macro & Markets 20th August 2025:
“US Housing Activity: Depressed”
Daily Dose of Macro & Markets 19th August 2025:
“Japan’s Nikkei Breakout: Should It Be Chased?”
Weekly Risk Appetite Gauge:
'Weekly Risk Appetite Gauge', 18th August 2025:
“The Troubling Message of Volumes”
Last week:
Longview on Friday, 15th August 2025:
“Equities: Europe vs. the US”
Quant Monthly Appendix, 14th August 2025:
“Part II: Eurozone Broad Index Sector Valuation Overview”
The SHORTVIEW (& market positioning), 12th August 2025:
Daily Dose of Macro & Markets:
Daily Dose of Macro & Markets 14th August 2025:
“UK Jobs Market – How Bad Is It?”
Daily Dose of Macro & Markets 13th August 2025:
“NFIB Recession Warning Signal”
Daily Dose of Macro & Markets 12th August 2025:
“All Eyes on CPI –> Shelter vs. Tariffs”
Weekly Risk Appetite Gauge:
'Weekly Risk Appetite Gauge', 11th August 2025:
“Short Term Models Back on SELL”