Week commencing 24 August 2026

Inflation fears and earnings divide global markets

United States (US) equity markets are poised to finish the week lower, led by the Nasdaq. The declines came as the relentless rise in energy prices reignited inflation concerns, which, combined with a heavy calendar of artificial intelligence (AI)-related debt issuance, pushed long-end US yields back towards a 20-year high.

Closer to home, the ASX 200 is on track to finish the week about 0.50% lower near the 9070 level after another busy week of earnings reports. The health care sector has been the clear standout, rising close to 10% after updates from CSL, Cochlear and Pro Medicus that pointed to a clearer pathway back to growth. The heavyweight materials sector also provided support following a solid result from BHP Group, which saw its shares surge more than 6% on the week.

Offsetting these gains, investors continued to desert the financials sector in response to recent trading updates that highlighted the impact of the federal government's significant budget taxation changes on the housing market and mortgage demand. Commonwealth Bank of Australia led the declines, falling 5.60% this week after a 6% drop the previous week.

The week that was: highlights

• US Philadelphia Fed manufacturing index surged to 47.4 in August, comfortably beating the 25 consensus forecast, while the New York (NY) Empire State manufacturing index rose to 20.60, well above the 11 expected
• US initial jobless claims fell to 206,000, beating the 210,000 consensus forecast and down from 212,000 in the prior week
• US housing starts for July fell 12.4% month-on-month (MoM) to 1.239 million, missing the 1.35 million consensus forecast, while building permits rose 5% MoM to 1.443 million, exceeding the 1.37 million consensus
• China's industrial production year-on-year (YoY) for July expanded by 4.5%, missing the 5.0% consensus forecast and slowing from 5.3% prior, while retail sales YoY grew just 0.6% versus the 1.5% forecast
• China new home prices across 70 cities fell 3.2% YoY in July, marking a 37th consecutive month of annual declines
• Japan's preliminary second quarter (Q2) gross domestic product (GDP) growth rate quarter-on-quarter (QoQ) came in at 0.3%, missing the 0.5% consensus forecast, while July inflation rate YoY accelerated to 1.9% from 1.6% prior
• Japan's exports YoY for July surged 23.2%, beating the 19.9% consensus forecast, while machinery orders YoY for June jumped 16.9%, well above the 10.8% consensus forecast
• The United Kingdom (UK)'s inflation rate YoY for July increased to 2.9% from 2.6% prior, matching expectations, while core inflation rate YoY edged up to 2.6%, beating the 2.5% consensus forecast
• The UK unemployment rate for June held steady at 4.9%, slightly above the 4.8% consensus forecast, as employment change registered an 83,000 increase
• The Eurozone ZEW economic sentiment index for August jumped to 31.4, beating the 25.4 consensus forecast and rising from 23.4 prior
• Australia's labour force report for July showed jobs fell 15,800 against consensus forecasts for a 15,000 gain, pushing the unemployment rate up to 4.5% versus 4.4% expected
• Staying in Australia, the Westpac consumer confidence index for August surged 6% MoM to 88.9 from 83.9 prior
• WTI crude oil rose 4.76% this week to $86.32
• The US dollar index (DXY) fell 0.82 to 98.82
• Bitcoin soared 17.25% this week to $73,695
• Gold surged 3.12% this week to $4513
• Wall Street's gauge of fear, the volatility index (VIX), rose to 16.02 this week from 14.26 the previous week.

Key dates for the week ahead

Australia & New Zealand

• AU – Reserve Bank of Australia (RBA) meeting minutes: Tuesday, 25 August at 11.30am AEST
• AU – Inflation July: Wednesday, 26 August at 11.30am AEST

China & Japan

• CN – National People's Congress: Tuesday, 25 August
• CN – National People's Congress: Wednesday, 26 August
• JP – BoJ Himino speech: Thursday, 27 August at 11.30am AEST
• CN – National People's Congress: Thursday, 27 August
• JP – Unemployment rate July: Friday, 28 August at 9.30am AEST
• JP – Consumer confidence August: Friday, 28 August at 3.00pm AEST
• CN – National People's Congress: Friday, 28 August

United States

• US – Conference Board (CB) consumer confidence August: Wednesday, 26 August at 12.00am AEST
• US – Core personal consumption expenditures (PCE)price index MoM July: Wednesday, 26 August at 10.30pm AEST
• US – Durable goods orders MoM July: Wednesday, 26 August at 10.30pm AEST
• US – GDP growth rate QoQ  second estimate Q2: Wednesday, 26 August at 10.30pm AEST
• US – Personal income MoM July: Wednesday, 26 August at 10.30pm AEST
• US – Personal spending MoM July: Wednesday, 26 August at 10.30pm AEST
• US – Initial jobless claims 22 August: Thursday, 27 August at 10.30pm AEST
• US – Jackson Hole Symposium: Thursday, 27 August
• US – Jackson Hole Symposium: Friday, 28 August
• US – Non-farm payrolls annual revision preliminary: Saturday, 29 August at 12.00am AEST
• US – Jackson Hole Symposium: Saturday, 29 August

Europe & United Kingdom

• UK – Nationwide housing prices YoY August: Friday, 28 August at 4.00pm AEST
• EA – Economic sentiment August: Friday, 28 August at 7.00pm AEST

Key events for the week ahead

AU: inflation (July)

Date: Wednesday, 26 August at 11.30am AEST

June's consumer price index (CPI) data saw headline inflation ease to 3.8% YoY in the 12 months to June 2026, down from 4.0% in May and below the 4.0% consensus. The monthly reading fell 0.1%. The RBA's preferred measure, the trimmed mean, held steady at 3.6% YoY, also coming in below the 3.8% forecast.

The cooler June print, combined with Governor Bullock's more balanced tone acknowledging weakness in housing and employment, sealed the RBA's decision to hold the cash rate at 4.35% at its August meeting.

Looking ahead to next Wednesday's July monthly CPI release, markets will be watching whether the recent moderation continues or whether the partial roll-off of the fuel-excise cut and lingering capacity pressures push measures higher again.

The preliminary expectation is for the headline rate to ease to 3.5% YoY, with the trimmed mean remaining around the 3.6% area. An in-line or softer core reading would reinforce the case for the RBA to stay on hold at its September Board meeting. A hotter-than-expected trimmed mean would revive upside risks to the inflation outlook and could prompt markets to rebuild the probability of further tightening this year.

The Australian interest rates market is set to finish this week pricing in 4 basis points (bp) of tightening for the RBA's September Board meeting, with a cumulative 15 bp of rate hikes priced before year-end.

AU all groups CPI and trimmed mean chart

US: core PCE Price Index MoM (July)

Date: Wednesday, 26 August at 10.30pm AEST

Last month, headline PCE fell 0.1% MoM in June, easing the annual rate to 3.7% from 4.1%. The Federal Reserve (Fed)'s preferred inflation gauge, core PCE, rose just 0.1% MoM after three consecutive 0.3% gains, taking the annual rate down to 3.3% from 3.4% in May. While the monthly core print was softer than the 0.2% consensus, the YoY reading remained well above the Fed's 2% target.

Earlier in the session, the Fed left rates unchanged in the 3.50% - 3.75% range for a fifth consecutive month, though three members dissented in favour of a hike. Chair Kevin Warsh continued to emphasise data dependence and the Fed's unwavering commitment to price stability, while reiterating that the Committee is 'not constrained by market prices'. With the September meeting now less than a month away and Jackson Hole at the end of next week providing the next major communication opportunity, Wednesday's July core PCE release will carry weight.

Consensus expects core PCE to rise 0.2% MoM in July, leaving the annual rate unchanged at 3.3%. A hotter-than-expected print would lift the probability of a September hike. A softer reading would help temper those expectations and support the view that the Fed can afford to remain patient.

The US interest rates market is set to finish the week pricing in 9 bp of rate hikes for the Fed's September meeting and a total of 23 bp of tightening for the remainder of 2026.

US core PCE inflation annual chart

US: Jackson Hole Symposium

Date: Thursday, 27 August

The Jackson Hole Economic Symposium is an annual conference hosted by the Kansas City Fed in Jackson Hole, Wyoming. The event gathers central bankers, finance ministers, academics and financial market participants from around the globe to discuss important issues facing the global economy.

While it is historically more revered for its academic discussions than as a spotlight for immediate monetary policy direction from Federal Open Market Committee (FOMC) leaders, it has, in recent years, served as a stage for some meaningful announcements. In 2022, then-Chair Powell used the platform to push back against expectations for easing. In 2020, he used the same platform to announce the adoption of flexible average inflation targeting.

This year's symposium runs from 27 - 29 August under the official theme 'Financial Innovation: Implications for Payments and Policy'. The agenda is expected to centre on digital payments, stablecoins, tokenisation and related structural issues. Chair Kevin Warsh has already indicated a clear preference for framing 'big-picture' questions and has shown consistent reluctance to provide explicit near-term forward guidance.

Given that stance, any comments that meaningfully shift rate expectations appear unlikely. Markets will still listen closely simply because of the timing ahead of the September FOMC meeting, but the bar for a policy signal looks high.

Jackson Hole

US: Q2 earnings season

The US Q2 2026 earnings season is in the home stretch, with a vastly reduced flow of companies still to report. That said, next week still features some important names, including Intuit and Zoom Communications on Tuesday. The main focus, however, will be on NVIDIA, Salesforce, CrowdStrike Holdings and HP on Wednesday, followed by Best Buy, Marvell Technology, IREN and Workday on Thursday, with particular attention likely to fall on NVIDIA, Marvell and IREN given their heavy exposure to AI and data-centre demand.