Week Ahead: Jackson Hole and Treasury markets

It’s looks like a quieter calendar week ahead of a new month, which sees top tier US data in the first couple of weeks of September followed by multiple major central bank meetings. The end of August does see us follow proceedings in Jackson Hole, where the great and the good of the central banking world gather, and markets often hold their breath in anticipation of potential clues around new, upcoming policies. Previous notable market moving speeches include Ben Bernanke’s 2010 offering which laid the groundwork for QE2 and an aggressive multi-month stock market bull run, while Powell’s 2022 ‘pain’ speech shattered Wall Street’s hopes of an early policy pivot and caused a 7%+ drop in stocks over the next 10 days.

Will new Fed Chair Warsh cause similar market ructions? Sadly for us wanting volatility and fireworks, it seems unlikely. Expectations seems to be on structural changes to the economic system rather than rate signals and near-term policy decisions. His distaste for ‘spoon feeding’ and any forward guidance is now well-known. Instead, we are likely to hear about balance sheets, financial innovation and perhaps detail on ‘regime change’ around his overhaul of Fed processes.

That said, one area which could be of big interest is how he sees the Treasury-Fed partnership, and specifically the evolving relationship between the FOMC and Treasury Secretary Scott Bessent. Last week, we wrote about watching Treasury yields but little did we know bond markets and Bessent would become the main centre of attention. Markets are still trying to digest his comments around potentially intervening in the Treasury market to cap long-term yields. Indeed, do we get an announcement around this policy in the next few days, as he mentioned? Ultimately, at the moment there is a large amount of scepticism about any changes that can have a long-term impact on the near-6% budget deficit, especially this close to the midterm elections.

Should some true US fiscal consolidation emerge, the combination of tighter fiscal policy and looser monetary policy should be dollar negative. But consolidation of this type seems unlikely, while US policy credibility takes another battering, as very well exemplified by the rip higher in gold and bitcoin, plus the dollar breakdown, (which we highlighted in last week’s Week Ahead). The Treasury may well be interested in protecting the long end which also means some outperformance of high-beta commodity currencies and emerging market currencies in general. But whatever lies ahead, we continue to like the precious metal rebound, even if it is a little stretched. EUR/USD also looks to have rejected higher prices for the time being too, around 1.17, though the USD/CHF head and shoulders reversal pattern remains in play if prices stay below the 0.8045 neckline.

In Brief: major data releases of the week

Wednesday, 26 August 2026

– Australia CPI: July monthly CPI is forecast to rise 3.3% from 3.8% supported by travel and fuels. Electricity should be the main drag. The RBA’s favoured metric, trimmed mean, is expected to print at 3.5%.

– US Core PCE: The Fed’s preferred inflation metric is expected to rise one-tenth to 0.2% m/m and remain unchanged at 3.3% y/y in July. The modest pick up is due to an outsized gain in portfolio management fees which should be revised down in September. The benign data should boost the doves and an on hold Fed rate decision next month.

 – Nvidia Earnings: Hyperscaler spending and guidance from the world’s biggest company by market cap will be the focus. Investors will also want to hear how the Blackwell architecture rollout is going, plus any impact on margins from rising costs.  Options markets see a +/- 4.7% move during the next trading day.

Thursday, 27 August 2026

-Jackson Hole Fed Symposium: The annual Fed conference sees major central bankers discussing ‘Financial Innovation’. Fed Chair Warsh’s keynote speech is scheduled on Friday. The current ‘family fight’ among the FOMC around policy could be a focus. A 25bps rate hike is currently priced at around 40%.

Friday, 28 August 2026

-Tokyo CPI: Consensus sees the forerunner to nationwide headline inflation ticking down one-tenth to 1.9%, and core remaining steady at 2.0%. Underlying momentum in recent Japan price data remains. Odds of a September BoJ rate hike sit at just above 80%.