Markets Await Fed Minutes, Symposium

STOCK INDEX FUTURES

Stock index futures are lower. Target beat earnings expectations, although the bar was low and maintained full-year guidance. Target noted that pressure from tariffs and worrisome consumer will remain a challenge for the retail sector. Home Depot reported second-quarter earnings, with its profit falling slightly short of expectations. Walmart will report earnings tomorrow, where the group’s results could provide insights into how consumers are faring as tariff effects begin to take their effect on the economy. Tech sectors were down yesterday following a large tech-selloff that put markets on edge as concern about the AI booms staying power mounted.

Markets will continue to await remarks from Fed Chair Powell’s speech on Friday at the Fed’s Jackson Hole symposium. The event is often indicative of policymakers’ views on interest rates and could offer clues as to what will come next at the Fed’s meeting in September. On the data front, US purchasing managers’ surveys on manufacturing and services activity in August will be released on Thursday.

Housing starts in July beat expectations, with 1.428 million new starts vs. an expected 1.290 million, growing 5.2% since June. Demand for new homes largely came from apartments, a growing sign that home affordability has faltered in recent years. Building permits, on the other hand, shrank from June, with 1.354 million new permits issued by the government, below forecasts and June’s 1.393 million.

INTEREST RATE MARKET FUTURES

Futures are little changed across the curve ahead of the Fed’s Jackson Hole symposium and particularly Fed Chair Powell’s speech on Friday. Attention will also be paid to the minutes from the Fed’s last meeting, due on today. The minutes could offer clues as to how many on the committee are starting to see a September cut. Fed Funds contracts are pricing an 82.9% chance of a 25 bps rate cut in September.  A hawkish tone from Powell might mean a rocky road for bonds while comments that indicative of a September cut and further easing could provide support.

US purchasing managers’ surveys on manufacturing and services activity in August will be released on Thursday. These will provide an up-to-date indication of how tariffs have impacted both activity and prices. Now that tariffs are in effect, the input cost component of the PMI surveys, particularly in the US, should give a sense of the impact of the higher tariffs on prices.

On the supply side, the US Treasury will auction $16 billion in 20-year bonds on Wednesday and $8 billion in 30-year inflation-protected TIPS on Thursday.

The spread between the two- and 10-year yields fell to 55.2 bps from 55.9 bps on Tuesday.

CURRENCY FUTURES

The USD index is little changed as a speech from Fed Chair Powell at the Jackson Hole symposium remains the key focus this week for investors. Markets will also await the Fed’s July meeting minutes for any clues on policy outlook. The meeting was notable as the first since 1993 with two dissenting votes, as Fed governors Christopher Waller and Michelle Bowman favored a quarter-point rate cut instead of holding rates steady.

Euro futures are little changed. European Central Bank President Christine Lagarde said on Wednesday that Europe should look to strengthen its relationships with trade partners outside the US. On the data front, preliminary purchasing managers’ surveys on manufacturing and services activity during August in France, Germany, and the eurozone as a whole will be released on Thursday. These will be among the first indicators of how US tariffs on European goods have impacted activity and prices. Germany will release second-quarter GDP data Friday, while France’s business survey for August is also due.

British pound futures are little changed against the dollar after fresh data showed that CPI inflation gained pace in July. CPI inflation rose to 3.8% percent on an annualized basis in the UK, up from 3.6% in June and an 18-month high. Economists were expecting a reading of 3.7%. The data will likely keep policy makers at the Bank of England from cutting rates in the near term. Inflation is likely to rise to 4.0% in the next few months and fall back to the bank’s 2% target in 2027, the BoE said. Policymakers there paid particular attention to rising food inflation, which climbed to 4.9% in July from 4.5% in June. Annual core inflation inched higher to 3.8% last month, from 3.7% in June, while services inflation climbed to 5.0% from 4.7%. The main driver was a large increase in air fares, the largest July rise since monthly statistics began in 2001, though that was likely due to seasonality changes. The BoE faces a similar situation to the Fed, where it must balance lowering inflation with boosting a sluggish labor market. However, on a positive for the bank, many of the inflation drivers in today’s report are likely to be one-off price increases. Looking ahead, preliminary UK purchasing managers’ surveys on manufacturing and services activity during August on Thursday, followed by GfK’s consumer confidence survey for August and July retail sales on Friday, will round out the week. Any signs of economic weakness could bolster rate-cut expectations.

Japanese yen futures held steady in the overnight session. New data shows that Japanese exports in July saw their biggest drop in four years, falling for a third straight month, a sign as to how US tariffs have impacted the economy. Exports declined 2.6% compared with the same period a year earlier, following a 0.5% drop in June, according to the Ministry of Finance on Wednesday. Economists had forecast a 2.1% decline. Shipments to the US fell 10.1% on year due to weakness in automobile exports. That compared with June’s 11.4% contraction and marked the fourth straight month it has declined. Despite the fall, machinery orders grew 0.3% in June, up from May’s -0.4% slump, putting orders up 7.6% on the year. Focus now shifts to government data on Friday, which is expected to show that inflation remains well above the central bank’s 2% target. Consumer prices excluding fresh food are expected to have risen 3% from a year earlier in July, according to a poll of economists by data provider Quick. That compares with the 3.3% increase recorded in June.

Australian dollar futures are lower, falling in line with its sister currency the New Zealand dollar after the Reserve Bank of New Zealand cut rates on Wednesday. Australia’s Westpac-Melbourne Institute Consumer Sentiment Index surged 5.7% in August 2025 to 98.5, the highest level since February 2022, following a 0.6% rise in July. Investor focus will turn to flash PMIs and scheduled speeches from Reserve Bank of Australia officials later in the week. On the monetary policy front, market participants are increasingly expecting further easing by the RBA before year-end. While no immediate action is anticipated, traders have priced in an additional 50 basis points of rate cuts by November.

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