Macroeconomics: The Day Ahead for 1 September 2026

As northern hemisphere markets return from its summer holiday season, many of the geopolitical and economic clouds remain the same: the conflicts in the Persian Gulf, the war in Ukraine, energy price pressures, the hopes and concerns surrounding AI investment, developed world budget deficits and very elevated debt loads. The fractured geopolitical stage comes into focus via way of the G20 meeting in the US, and the SCO Summit in Kyrgyzstan, as well as the latest US intervention / deal to secure access to Venezuela’s vast oil resources. Lack of credibility remains all too obvious as Treasury Secretary Bessent touts ‘an American growth agenda for the rest of the world’, while at the same time engaging in a trade war with what used to be its closest economic ally Canada, as well as others, and attempting to bring down long-term US treasury yields with a buyback programme that runs counter to Fed chair Warsh’s commitment to bring down inflation, allowing market rates to guide policy. It is also fundamentally incongruous and paradoxical to argue for more deregulation to spur growth, while intervening economically (trade wars) and militarily in so many parts of the world. Little wonder that ‘debasement fears’ have re-emerged as a talking point.  There is more than a little irony that the US-Venezuela oil deal has managed to antagonise both hardline Chavistas, fundamentally opposed to giving away any of the country’s resources, and Venezuela’s opposition, who were not even consulted, with the legality of any deal being made by interim President Rodriguez obvious, while also casting doubt on any commitments to deliver fresh elections. The SCO was not set up to be a counterweight to NATO, even if it is perceived as such, but rather to promote regional economic development and security. Like the BRICS grouping (which meets 12/13 September), member states – most notably China, Russia, India, Pakistan, Iran – have diverse, often divergent interests, and have struggled to come to agreements on things like a common development bank or payment systems. Per se, the array of one-to-one meetings between the various leaders may prove to be the main point of interest, particularly with very differing views among the group’s members on the Iran and Ukraine conflicts.

 

Be that as it may, the statistical agenda has a typical start-of-month feel to it, via way of PMIs, US labour market indicators and auto sales, Eurozone inflation, German orders and South Korea Trade, with the Fed’s Beige Book, Japan’s Q2 CapEx, Australian and Indian Q2 GDP also on tap. Canada’s BoC is expected to hold rates again, but the focus will be on its views on the impact of the US trade war in the wake of a strong Q2 GDP rebound of 3.3% SAAR, while New Zealand’s RBNZ is expected to initiate a tightening cycle with a 25 bps rate hike to 2.75%, and signal more to come. Following on from Warsh’s Jackson Hole speech, and just ahead of the Fed’s pre- FOMC meeting ‘purdah’ starting on 5 September, speeches by Barr and Waller will be closely watched (though they may both be cautious with labour and CPI data for August still to be published ahead of the meeting), as will a smattering of ECB speakers ahead of next week’s council meeting. A renewed military skirmish between the US and Iran, following attacks on shipping, serves as a reminder that for all the more hopeful signs of increasing energy traffic through the Strait of Hormuz (and alternative routes), the risk of ‘flare-ups’ has not been dispelled. Indeed, perhaps the more salient point for commodity markets is that it is grains, softs, gold and copper that are leading the most recent commodity price rally, as scarcity concerns rise.

 

Warsh’s speech was useful for outlining analytical parameters for both inflation and the labour market, highlighting the fact that nearly half of PCE deflator sub-indices are above 3.0%, but as importantly placing much more weight on the low Unemployment Rate and weekly jobless claims, and making no reference to Payrolls, and paying scant attention to wage indicators. Markets may, out of habit, still prove sensitive to Payrolls, which are seen rebounding to 55K after the unexpected -23K drop in July, and as ever subject to revision, with the Unemployment seen holding at a low 4.1%, while volatile and often heavily revised JOLTS Job Openings are expected to ease to 7.313K. Ahead of that, the ISM Manufacturing and Non-manufacturing surveys are seen little changed at a solid 55.2 and 54.1 respectively, with Auto Sales also expected to be little changed at 16.30 Mln. The jobs report will not be decisive in terms of the September rate decision, and the Beige Book appear likely to suggest a modest to moderate pick-up in activity, paced by manufacturing, as well as increasing optimism, if the regional Fed surveys serve as a guide, with overall robust Q2 earnings and the notable strength of Q2 personal consumption underlining why Warsh described current rates as not restrictive, even if rising long-term rates will be a headwind going forward. (Interestingly, Warsh also did not mention high mortgage rates in his speech). It should be added that while Warsh restored confidence after the July FOMC meeting fumble, he now has to deliver on ‘we have work to do’ with a rate hike(s), barring a much clearer deceleration in inflation. Some thoughts on Warsh’s speech via interview with CGTN Europe

 

Sunday’s NBS PMIs suggest the Manufacturing sector (49.8 vs. 49.2) has recovered from some of the adverse weather impacts, but the latter continue to pose a headwind above all for construction, even though High tech manufacturing continues to expand at a solid pace. A further dip in the Non-manufacturing (unchanged at 49.0 vs. expected 49.4) underlines the continued weakness of domestic demand, and the likelihood that August activity data will add to pressure for significant stimulus, rather than the piecemeal ‘targeted’ measures of the past few years. PMIs are seen unrevised, with Manufacturing at 52.8 and Services at 51.7

 

This week’s August headline HICP is forecast to jump to 3.3% y/y from 2.9%, though core is seen steady at 2.5% y/y, with energy prices the primary pressure, and as such reinforcing the case for a rate hike next week, and the likelihood that it will signal retain a tightening bias, though without a specific commitment to a further hike, which will remain contingent on energy price developments. German Factory Orders will be closely watched after a strong boost from volatile Capital Goods Orders saw June Orders rise 3.1% m/m (subject to revision), and a more modest 0.3% m/m is expected for July.

 

This week’s run of data is mostly second division, though Tuesday’s BRC Shop Price Index (seen unchanged at a very benign 0.9% y/y) will offer some insights into goods price pressures, which in July saw a setback in Non-Food to 0.2% y/y from 0.6%, and some upward pressure in Fresh Food to 3.1% y/y after a steady decline since January’s 4.4%. The BoE’s DMP survey is forecast to show a slight 0.1 ppt increase in 1-yr CPI expectations to 3.1%, but 3-mth Output Price expectations holding at a relatively lofty 3.9%.

 

Both Industrial Production at 0.1% m/m 4.1% y/y and Retail Sales at 2.4% m/m 4.0% y/y point to a pick-up in Q3 GDP, with AI related investment, some strength in oil products and pharmaceuticals output pacing the gain in the former, add METI forecasting a sharp acceleration in August to 3.1% m/m. Household Spending at the end of the week is expected to contract a slower pace at -1.6% (vs. June -3.3%), implying the strength in Retail Sales continues to be boosted by tourists. Tuesday’s Q2 CapEx is seen contracting -0.3% y/y headline, but rising 1.6% y/y ex-Software, with Corporate Profits seen remaining robust at 15.2% y/y, and anything stronger than expected would imply an upward revision to Q2 final GDP (due 8 September).

 

Monday’s Q2 GDP data trounced expectations at 7.8% y/y vs. forecast 7.3%, with the generally more reliable GVA measure even more robust at 8.2%, with Q1 measures also revised quite sharply higher to 8.6% and 8.7% respectively. The anticipated drag from high energy prices, tariffs and a weak Q2 monsoon rains did not materialize, with Gross Fixed Capital Formation accelerating to 11.9% y/y, suggesting govt industrial policies are gaining traction, while the drop in Q2 inventories should support output going forward. A weak INR probably helped, as did state-owned companies largely absorbing the impact of high energy prices. But it also makes the case for the RBI to hike rates rather more compelling.

 

Dubai will host two energy conferences (Middle East Energy and Energy Trading Middle East), as the Vladivostok Eastern Economic Forum takes place in Russia.

 

The cocoa community gathers in Singapore for the Cocoa Association of Asia’s annual conference.

 

The grains sector will look to Australia’s ABARES crop report, the UN FAO Food Price Index and Grains S&D report, and the AMIS Grains Market Monitor.

 

The Q2 earnings season is largely done and has certainly been impressive, with FactSet noting that “86% of S&P 500 companies have reported a positive EPS surprise and 77% of S&P 500 companies have reported a positive revenue surprise.” Still, Broadcom, Dell, HP Enterprise, Palo Alto Networks and Snowflake headline a busy week for US tech sector earnings. There are 9 S&P 500 companies reporting this week, with worldwide corporate earnings highlights as compiled by Bloomberg News likely to include: Alimentation Couche-Tard, Bank Rakyat Indonesia Persero, Beijing-Shanghai High Speed Railway, Broadcom, China CSSC, China Yangtze Power, Ciena, Credo Technology Group, Dell Technologies, Evergrande Property Services, HP Enterprise, Medtronic, MetaX Integrated Circuits Shanghai, MongoDB, NetApp, Palo Alto Networks, PetroChina, Snowflake, Swiss Life, Z.AI, Zscaler.