18/08/2025
Markets Await Powell’s Jackson Hole Speech as Geopolitical Risks and Weak Jobs Data Cloud Outlook
Global markets entered the week with a cautious tone as investors weighed geopolitical risks, central bank policy signals, and mixed economic data. US equity futures drifted lower, following strong recent gains that left the S&P 500 near record levels. European equities also weakened, while cryptocurrencies retreated from last week’s highs, with Bitcoin slipping toward $115,000 and Ethereum falling below $4,300, bringing the sector’s total market capitalization to around $3.9 trillion.
Geopolitical developments added uncertainty, as Ukrainian President Volodymyr Zelenskiy and European allies arrived in Washington for talks with President Trump amid speculation about concessions made to Russia at his summit with Vladimir Putin. The prospect of a peace deal with terms unfavorable to Ukraine has kept markets on edge, though investor attention remains primarily fixed on upcoming Federal Reserve communications.
The Fed’s annual Jackson Hole symposium is set to dominate the week. Chair Jerome Powell is scheduled to speak on Friday, August 22, in what is expected to be his final address at the event, with investors seeking clarity on the September policy decision. The central bank faces a difficult balancing act: inflation remains about one percentage point above target, with services inflation accelerating in July, while labor market data showed a marked slowdown, with just 73,000 jobs added last month and downward revisions lowering recent employment gains to an average of 35,000. Fed officials remain divided, with some highlighting persistent inflation risks while others point to weakening job growth. Markets are pricing in a roughly 80% probability of a quarter-point cut in September, with expectations for at least one further reduction by year-end.
Treasury markets reflected this cautious outlook, with yields moving lower across the curve, led by longer maturities. The two-year yield slipped to 3.74% and the 10-year yield to 4.29%. Investors are closely watching curve dynamics for signals on growth and inflation expectations, ahead of the Fed’s policy trajectory.
On the corporate side, earnings season is winding down but has been broadly positive so far. Upcoming results from Walmart, Target, Home Depot, and Lowe’s will be closely watched for insights into consumer spending trends, while Monday’s focus is on Palo Alto Networks and Blink Charging. Resilient earnings, coupled with potential Fed easing, underpin the medium-term outlook for equities, though risks from geopolitics, tariffs, and stretched valuations remain significant.
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