Markets on pause, expectations in motion
Week of August 18–22
The third week of August was marked by a modest flow of economic data, yet key signals began to shape the global monetary outlook. In the U.S., housing starts and building permits posted moderate gains, while the Fed minutes revealed ongoing concerns about inflation. Powell’s latest remarks hinted that conditions may soon warrant a policy rate adjustment.
In Europe, inflation in the UK rose to its highest level in 18 months, even as Germany confirmed a contraction in its second-quarter GDP. Despite this, analysts expect the Bank of England to consider additional rate cuts before year-end. Meanwhile, Asia showed signs of softness: both China and Japan reported a decline in exports, and China’s youth unemployment remains elevated.
In Latin America, institutional developments made headlines. Petrobras’ CEO resigned, while Pemex’s credit rating was placed under review following the release of its 2025–2035 strategic plan. As markets enter a more uncertain phase, attention now turns to Jackson Hole, where central bank narratives may set the tone for the remainder of the year.
- United States: Fed minutes highlight inflation concerns and labor weakness. S&P affirms ‘AA+’ rating. Housing starts up 2.8%, permits up 0.5%. Powell suggests current conditions could justify a rate adjustment.
- Europe: UK may cut rates again, despite 3.8% inflation. Germany contracts. EU limits tariffs on exports to the U.S.
- Japan: Exports drop 2.6% YoY; exports to the U.S. fall 10.1%.
- China: Youth unemployment rises to 17.8%. Benchmark rates unchanged.
- Brazil: Petrobras CEO resigns.
- Mexico: Moody’s places Pemex under review. Fitch sees neutral impact. Inflation surprises to the downside; Q2 GDP slightly revised.
“Don’t bottom fish.” — Peter Lynch
KEY EVENTS
- U.S.: Consumer Confidence → August 25
- U.S.: Q2 GDP Release → August 28
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