The infoshot to help kick-start your week
Coming up this week:
Nvidia Q2 earnings – Wednesday
The world’s largest company by market cap, Nvidia, will round off the summer’s tech and AI-related earning reports on Wednesday.
Analysts are expecting Nvidia to report a 96% year-on-year increase in revenue and more gains in Q2 than Q1.
Jackson Hole Economic Symposium
Following all the recent drama in bond markets, all eyes will be on US Federal Reserve Chair, Kevin Warsh, when he delivers his first keynote speech at the annual Jackson Hole Economic Symposium on Friday.
After sending confusing signals during his first press conference as Fed Chair in July, bond traders will be looking for Warsh to provide clearer details on how he plans to deal with inflation.
Last week:
K-shaped economy leads Walmart Woes
Last week’s CPI release by the Bureau of Labor Statistics showed annual US inflation cooled to 3.4% taking some pressure off the Federal Reserve to raise interest rates. The odds of a rate hike at the next meeting in September have fallen to 42%.
On the subject of the war, the 60-day ceasefire between the US and Iran has now expired. Negotiations showed few signs of progress last week. Trump threatened to bomb Oman if Omani officials agree a deal with Iran over the Strait of Hormuz. This week, the US government is set to lay out a programme of new sanctions against Iran it has dubbed “economic D-Day.” Iran have threatened an “earthquake-like” retaliation if they go ahead.
US debt hits $4tn as bond yields reach twenty year high
Last week, US national debt reached the $40tn milestone sooner than expected. Heavy spending under the Trump and Biden administrations, Trump’s tax cuts and spiralling interest costs have caused the debt level to more than double in just 10 years.
Serious concerns about the health of the US economy, the impact the rising cost of bonds could have on the debt-laden AI industry, and inflation sent yields on 30-year US treasuries to 5.34% on Tuesday, their highest level in 20 years. The Treasury Department announced on Wednesday that it will increase the next round of bond buybacks from $2bn to $4bn, helping to ease yields and bring them back down to 5.18%.
Trade talks between the US and Canada collapsed on Friday. A new 50% US tariff will be placed on a range of Canadian goods from 8 September 2026. Trump claimed Canada “wants the benefits of being a state without being one”. Canadian PM Mark Carney called the tariffs a “miscalculation” and said they are designed to “hurt and divide us”. Carney confirmed Canada would reluctantly match Trump’s tariffs “dollar-for-dollar”.
UK markets outperform but jobs situation remains worrying
Our home markets were some of the only to finish the week up as they outperformed major US, Asian and European markets thanks to a rebound in mining stocks and another rotation away from tech into more defensive and traditional assets.
There was less positive news concerning the UK jobs market. Unemployment stayed at 4.9% as vacancies fell to a five-year low. The Office for National Statistics (ONS) cited labour and operating costs as the main reason for smaller firms scaling back hiring.
According to recruitment specialist, Adzuna, UK graduate jobs have now tumbled to their lowest level since tracking began ten years ago. Only 8,373 roles for university leavers were advertised in July, that’s 45% less than this time last year, and a huge way off the 55,000 positions available in 2017. Teaching, travel and construction were the only sectors to add roles as more and more large employers hold back on hiring hoping that AI and automation will be able to fill the gaps.
Notice:
For regulated financial advisers and investment professionals only, Copia does not provide financial advice, and the contents of this document should not be taken as such.
The performance of each asset class is represented by certain Exchange Traded Funds available to UK investors and expressed in GBP terms selected by Copia Capital Management to represent that asset class, as reported at previous Thursday 4:30pm UK close. Reference to a particular asset class does not represent a recommendation to seek exposure to that asset class. This information is included for comparison purposes for the period stated but is not an indicator of potential maximum loss for other periods or in the future.
