Financial Markets Daily Report31 August 2026
Markets saw high commodity prices and elevated sovereign yields throughout August, driven by the ongoing conflict in the Middle East, pressure on inflation expectations, and hawkish central bank rhetoric. Yet stocks trended higher on the back of a solid earnings season, while the USD weakened against the main currencies.
Last Friday, stocks were mixed, sovereign yields rose and the USD regained some strength as investors digested Fed Chair Kevin Warsh's Jackson Hole speech. Warsh shared his views on the U.S. economy more openly and sent a mildly hawkish message, underscoring inflation risks. Market-implied odds of a Fed rate hike in September surged from 35% to 60%.
This week, the focus will be on the release of euro area inflation and unemployment figures (Tuesday) as ECB members enter their quiet period prior to the September 10 meeting. Final August PMI data will also be released this week. In the U.S., the focus will be on the August ISM surveys (Tuesday and Thursday) and the employment report (Friday).