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In terms of geopolitics, the situation remains where it was, with the conflict ongoing and oil holding at elevated levels. Brent is sitting around $97 and US Oil near $89, so while we have not seen any further escalation this week, we also have not seen anything that would suggest a resolution is close. That elevated oil price continues to be the source of the inflation impulse that is driving everything else in this market at the moment, and until it comes down meaningfully,

Yesterday we saw a fresh round of US airstrikes on Iran following the weekend flare-up, along with further warnings from Trump. Oil extended its gains as a result, with the market now pricing in the possibility of sustained military exchanges rather than the isolated incidents we saw in August. Energy was the best performing S&P sector on the day, up 1.3%. It is worth remembering how quickly this has turned. Ten days ago we were discussing whether the war premium was coming o

The biggest news over the course of the UK bank holiday weekend was Kevin Warsh's speech at the Jackson Hole Summit, which surprised everyone with hawkish guidance for future rate decisions. He argued that inflation was running too high and that price stability would be the Fed's main focus, noting the Fed 'had work to do'. The markets reacted immediately, with September rate hike odds rising from just under 40% before to just under 60% after, then just over 60% as of yesterd

Yesterday saw the start of the Jackson Hole Symposium, with the main event being today when Fed Chair Warsh gives his speech (3 pm UK time). Yesterday lacked a major news event, so the markets were either reacting to the PCE/Nvidia news from Wednesday or were preparing themselves for the speech today. The only new piece of news was the weekly US unemployment claims, which were 5k below expected. Continuing claims were also below expected, backing up the low-hiring, low-firing

The two big news events yesterday were the PCE release and Nvidia earnings. PCE was mixed, with headline PCE y/y at 0.2% against an expected 0.1% and PCE m/m at 3.7% against an expected 3.6%. Core PCE by comparison was 0.2% m/m and 3.3% y/y, both in line with expectations. The monthly core that is most closely watched by the Fed stayed in line with expectations. We also saw US Prelim GDP q/q land as predicted at 1.5% as the US economy held steady. The mildly hot inflation pri