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Summer markets never fail to deliver surprising price action and often head-scratching market moves that often then retrace when September rolls around. We find it interesting that expectations for upcoming Fed meetings had been little changed since July’s announcement, with roughly 15bps consistently priced for September and 33bp for December. And this happened during a period in which Brent crude fell $15. To us, the market has been clearly saying that US rate expectations are currently being driven far more by data and Fed communication than by energy prices. On the latter, several officials have delivered hawkish-leaning comments in recent days.

So, the US jobs report was always likely to add to this volatility, especially as Fed Chair Warsh’s ambiguous communication is now meaning more flexibility for markets to interpret data, which ultimately increases the size of market moves around data releases. That surely is an ‘known unknown’ which most central bankers would want to avoid, though we may hear his reason at Jackson Hole at the end of the month. In any event, the soft NFP data with a falling jobless rate that fell for bad reasons, further dented the hawks and the chances of a September rate rise. Those odds now sit at 44%, from fully priced pre-the prior FOMC meeting. Crucially, this week’s inflation report will have a big say in this, though there will is still another NFP and CPI release to come ahead of the mid-September FOMC meeting. Gold bugs will certainly be watching too, as they look to build on their strong week and recent upside breakout.

For stocks, bad economic news is good news is a decent way of understanding some of the price action at present. In addition, current fundamentals remain difficult to ignore. The earnings season has once again demonstrated exceptionally strong technology earnings, accompanied by further upgrades to earnings estimates. Importantly too, valuation multiples have compressed while earnings have continued to improve, an unusually positive combination. That signals that as long as firm’s results remain resilient, the asymmetry still appears favourable for technology and with it in simple terms more stock market index upside.

That said, we are mindful of the AI bubble potentially being the biggest tail risk facing equity markets, with semiconductors as the most crowded trade. That kind of positioning naturally increases the probability that even relatively small pieces of news can trigger disproportionately large rotations when investors are heavily positioned in the same direction. We have also written previously about the losses in the ‘Nostradamus of AI’s’ hedge fund being a warning signal about juicing up returns via leverage and the attached hubris.

In Brief: Major Data Releases of the Week

Tuesday, 11 August 2026

RBA Meeting: The cash rate is set to be left unchanged at 4.35%. Price pressures are easing moderately with the trimmed mean inflation metric two-tenths below the RBA’s estimate at 3.6%. A ‘hawkish hold’ is still likely as policymakers want to assess incoming data. AUD needs to stay above the 100-day SMA at 0.7050 to keep last week’s positive momentum going. Upside targets then include the long-term top from February 2023 at 0.7157.

Wednesday, 12 August 2026

US CPI: July headline inflation is forecast to rise 0.1% m/m and 3.4% y/y from -0.4% and 3.5%. Core, which strips out volatile food and energy prices, will print two-tenths higher at 0.2% m/m and at 2.5% from 2.6% y/y. That would be the equal lowest annual core print since March 2021. The dollar’s weekly close wasn’t quite as bearish as it could have been, with eyes on the 200-day SMA below at 99.18 as initial support if prices do move lower.

Thursday, 13 August 2026

UK Q2 GDP: Expectations are for second quarter growth of 0.4% and 1.1% annual GDP. Early year seasonal momentum should be sustained but survey indicators appear less solid than GDP data. Business uncertainty around the Middle East conflict also lingers. We await a breakout in cable as prices track between 1.34 and 1.35. Long-term moving averages are below current prices with the midpoint of this year’s high and low just above at 1.3514.

Friday, 14 August 2026

US Retail Sales: Consensus expects the headline and ex autos to print at 0.2% and the control group at 0.3%. Higher gasoline prices likely weighed on consumer demand and saw weaker vehicles sales. Lower crude prices also likely pulled down sales.