State of the Market

What happened last week?

The United States announced secondary sanctions targeting Iran and warned countries maintaining financial ties with Tehran of possible retaliation; contemporaneous reporting linked the lower Wall Street opening to the sanctions threat and wider Iran tensions, while technology weakness and caution ahead of Nvidia's results also weighed on equities. The BEA reported firmer July PCE inflation and higher personal consumption; Reuters reported that U.S. stocks closed nearly flat to slightly lower, as the inflation reading added pressure to the Federal Reserve outlook and increased the stakes for subsequent data and the Fed chair's Jackson Hole speech. Dollar General reported stronger quarterly sales and raised its annual earnings and sales outlook; the shares rose sharply in premarket trading, which contemporaneous coverage linked to the better-than-expected results, sales growth and higher guidance. At Jackson Hole, Fed Chair Kevin Warsh emphasized data-dependent policy and the primacy of short-term interest rates; investors interpreted the remarks as increasing the credibility of a Fed willing to raise rates to contain inflation, pushing Treasury yields higher and U.S. stocks lower.

What matters this week?

1. Sep 1
   ISM Manufacturing PMIThe manufacturing survey will update the market's view of factory activity, demand and price pressures.
2. Sep 1
   JOLTS Job OpeningsThe labor-demand report will provide an early read on hiring conditions before the monthly jobs release.
3. Sep 3
   ISM Services PMIThe services survey will test the strength of the largest part of the U.S. economy and its price pressures.
4. Sep 4
   Employment Situation for AugustThe monthly labor-market release will shape expectations for the Federal Reserve's next policy decision and rate-sensitive assets.