Week Ahead

Oil and bond yields did most of the driving last week. Both climbed hard through midweek, pulling every index lower with them, before a comment from President Trump ruling out a strike on Iran before next month’s midterms sent oil down again on Friday. That eased the pressure just in time for Dow and NASD to close the week higher. DAX didn’t get the same lift: it had already dropped below 25,000 on Thursday, its lowest level since July, and Friday’s 1.1% bounce wasn’t enough to turn the week positive. ...

Friday’s jobs report did what the Fed had been worrying about it wouldn’t. Employers added just 29,000 jobs in September, far below the roughly 84,000 to 90,000 economists had expected, and unemployment ticked up to 4.2%. That cooled the bets on another rise in interest rates, and NASD rallied hard into the close, touching a new all-time intraday high before settling just short of its record close. Dow and DAX both finished the week lower, though, and bond yields were still high enough to keep the mood cautious. ...

It was a choppier week than the closing numbers suggest. Bond yields surged again in the middle of the week, unsettling all three indices for a day or two, before oil prices eased and an AI-driven rally in chip and tech names pulled everything back up by Friday. NASD did more than recover: Meta, AMD, and Intel led it to a fresh all-time high close mid-week, and it finished Friday just a fraction of a percent below that record. Dow, meanwhile, snapped a three-week losing streak. ...

The Fed did what the market had been pricing in for weeks: on Wednesday it raised its main interest rate by a quarter point, to a range of 3.75-4.00%, the first time it’s raised rates since 2023. What happened next is the more interesting part. Government bond yields pushed above 5% for the first time in almost two decades, which weighed hard on Dow and DAX, while NASD brushed the whole thing off and finished the week higher. That split, not the rate rise itself, is the story going into this week. ...

Everything else this week is just waiting for Wednesday afternoon. That’s when the Fed announces its rate decision, a few hours after August’s retail sales figures come out the same morning, and because policymakers stop giving speeches or interviews in the fortnight before every meeting, there’s nothing else on the calendar that comes close to mattering as much. Last week’s inflation figures came in higher than expected, and that alone was enough to tip the balance: traders now think the Fed is more likely than not to raise rates, where a week ago it was closer to an even bet. Wednesday is where we find out whether that shift was the right call. ...

US markets are shut today for Labor Day, so nothing moves until Tuesday. Once trading resumes, the week comes down to two releases: Thursday’s PPI and Friday’s CPI, both landing just days before the Fed’s 16 September rate decision. Friday’s stronger-than-expected jobs report already pushed the odds of a hike higher, and with Fed officials now in their pre-meeting blackout period, this week’s inflation data is the last real input anyone gets before that decision. ...

Last week ended the way this Fed cycle keeps ending: with markets moving more on what a policymaker said than on anything a data release showed. New Fed chair Kevin Warsh used his first Jackson Hole keynote on Friday, marking his hundredth day in the job, to say he isn’t convinced inflation’s underlying trend has improved even after a run of better-than-expected summer prints, and traders responded by pushing the odds of a September rate hike up to 55.7%, about twenty percentage points higher than the day before. All three indices closed the week higher regardless, DAX out in front on an automaker-led Friday rally that pushed it to a fresh all-time high, while Dow and Nasdaq both remain a little below their own record levels. The real test of whether Warsh’s tone holds up lands Friday, when August’s jobs report either backs up his inflation concerns or repeats July’s shock 23,000 miss and undoes the very odds his speech just built. ...

Last week never really settled down, and it closed with all three indices lower for a second week running even after a strong Friday. This week starts quietly by comparison, nothing major is due out of the US today, but that quiet is only the calm before Friday, when new Fed chair Kevin Warsh delivers his first keynote address at Jackson Hole. Wednesday’s GDP and PCE double-header is the last real data point standing between here and there, and how markets read it will shape how much room Warsh has to move the needle on Friday. ...

This one’s going out two days later than planned, picking up mid-week instead of at the start of it. Last week ended with records: the S&P 500 broke 7,800 on Thursday, the DAX brushed its own all-time high on Friday, and the Nasdaq Composite put in its best single session in weeks. The two sessions since have undone a good part of that. Long-dated Treasury yields have spiked to levels not seen since 2007, oil has jumped as US-Iran talks over the Strait of Hormuz broke down, and all three indices have now fallen for two straight days. Today’s FOMC minutes and a wave of retail earnings, several of them out this morning, are what decide whether that continues. ...

Last week gave the desks something to talk about. The DAX, Dow, and Nasdaq all closed near records on Friday, each riding its own version of the same story: an earnings season stronger than expected, and a labour market soft enough to put rate cuts back on the table. This week hands the wheel to a different driver. With earnings thinning out, US inflation data takes over as the thing that moves price. ...