In a significant geopolitical meeting, former US President Donald Trump and Russian President Vladimir Putin convened in Alaska on Friday. This meeting comes at a time when global economic realities are changing. The US and China have decided to extend their tariff cease-fire for 90 more days as the two countries continue to negotiate an end to the ongoing trade war. Panelists and moderators alike emphasized the need for international collaboration and what that means for markets around the world.
Along with the shifting political tides, the field of potential candidates to take over the helm from Jerome Powell as Federal Reserve governor has widened. Powell’s term as chair expires in May 2026. Beyond this, and more importantly, Trump will get to pick his own successor, which throws the fate of US monetary policy into an even greater state of flux.
The upcoming week will see several crucial economic indicators released, starting with Flash PMI data for August from both the United States and the eurozone. Analysts are closely monitoring these numbers to gauge economic activity amid fluctuating inflation rates. Next week, the Federal Open Market Committee (FOMC) will release its minutes. These documents will provide important context for understanding the Fed’s recent decisions and future direction.
Next week, workers all over Europe will be involved in a wave of new strike action. That might be enough to shape inflation expectations, as the European Central Bank (ECB), meeting tomorrow, is on track to cut rates 25 basis points from the current 2.0%. Market watchers are betting almost 50-50 that the ECB will make at least one more rate cut this year. They use this prediction due to the continued impact of inflationary pressures on monetary policy decision-making.
Also due for release next week is Japan’s CPI. We hope this new announcement will deepen our understanding of the role inflation is playing in the world today. Real-time inflation recent data surprised to the upside with a 0.3% month-over-month increase in US inflation, most recently shown by Core CPI. Furthermore, the annual rate jumped from 3.0% to 3.1% on a year-over-year basis. A surprise jump in inflation helped trigger the market reversal. This move came after the unexpected jump in Thursday’s PPI inflation.
As US-China tensions show signs of abating, there is hope for a more favorable US-China economic climate. Yet doubt remains in the air.
“E.J. will ensure that the Numbers released are HONEST and ACCURATE.” – Donald Trump
Investors and policymakers alike are preparing for the expected changes in fiscal and monetary policy. Like us, they are responding to the myriad of economic data releases and geopolitical meetings as these developments unfold. The interplay between inflation data, central bank decisions, and international relations will play a critical role in shaping market expectations in the weeks ahead.