TL;DR

Powell’s Jackson Hole speech, tight credit spreads, and rising US debt/consumer stress in focus.

Highlights

• Fed Chair Powell’s Jackson Hole speech Friday is key for September rate-cut expectations; markets price in 85% odds of a cut 1.
• US Treasury yields hit multi-month lows; investment-grade credit spreads tighten to 73 bps, lowest since 1998 23.
• US national debt tops $37T; interest costs reach $1.2T/year, with rising delinquencies and corporate bankruptcies 10.
• July US CPI rises to 2.7% YoY; tariffs begin to impact core goods prices; consumer sentiment drops to 58.6 19.
• Trump pauses new China tariffs after Putin talks; India faces higher US tariffs over Russian oil imports 5.
• Oil prices edge down as Trump-Putin meeting reduces near-term risk of new sanctions on Russian crude 4.
• Israel prepares for Gaza City assault amid nationwide strike and protests; Red Sea disruptions persist after Israeli strike in Yemen 6920.
• Nvidia hits $4.4T market cap; US-China chip tensions persist as Nvidia resumes China exports with new 15% fee 1117.
• Ethereum ETFs see record $2.9B weekly inflows; large ETH unstaking queue may add volatility. Chainlink rallies on whale accumulation and buyback 1314.
• Air Canada strike grounds 700 flights, disrupting North American travel; government intervention ongoing 18.
• Japan’s FSA approves first yen-backed stablecoin (JPYC), launching this fall 12.

Commentary

US traders head into Jackson Hole week with markets firmly pricing in a September Fed rate cut, but Powell’s Friday speech will be the main event for direction 1. Treasuries have rallied, pushing yields to their lowest since May, while investment-grade credit spreads are now at their tightest in over two decades—both signs of strong demand for high-quality assets and expectations of easier policy 23. However, the macro backdrop is less reassuring: US national debt has breached $37 trillion, interest costs are at record highs, and delinquencies and bankruptcies are rising, particularly in consumer and industrial sectors 10.

July’s CPI data showed inflation ticking up to 2.7% year-on-year, with tariffs beginning to put upward pressure on core goods prices 19. While retail sales rose modestly, real spending is flat and consumer sentiment has dropped to levels last seen during the Great Financial Crisis 19. This week’s earnings from major retailers will offer more insight into the health of US consumers and the impact of tariffs and inflation on margins 19.

Geopolitics remain in focus but with a slightly lower risk premium: Trump’s pause on new China tariffs following talks with Putin removes an immediate threat to US-China trade, though India faces higher duties over Russian oil 5. Oil prices have softened as the risk of new sanctions on Russian crude recedes, but the Middle East remains volatile 4. Israel is preparing a major Gaza City assault amid domestic unrest and ongoing Red Sea disruptions, which could keep energy and shipping markets on alert 6920.

In tech, Nvidia’s market cap surge and robust cloud capex forecasts highlight ongoing AI investment, but US-China chip policy remains a risk factor as Nvidia resumes China exports under a new fee structure 1117. Crypto flows remain strong, with Ethereum ETFs seeing record inflows and Chainlink rallying on whale accumulation, though a large ETH unstaking queue could add near-term volatility 1314. Japan’s approval of a yen-backed stablecoin expands the global digital asset landscape 12.

Traders should monitor Powell’s tone at Jackson Hole, retail earnings for consumer and tariff signals, and any escalation in geopolitical hotspots. With risk premiums compressed and macro headwinds building, markets are susceptible to shifts in rate or growth expectations.