Written Commentary
ADM Reports Second Quarter 2026 Results
August 4, 2026
Persian Gulf impasse continues to underpin energy prices, as UK CPI, Australian Wages and Japan Orders are digested ahead of Eurozone Labour Costs and July FOMC minutes; US retailers and China tech earnings.
- U.K.: household energy prices pace CPI increase is offset by road fuel and affairs, core Services still rather sticky, but BoE likely to keep rates on hold in the near term.
- U.S.A.: FOMC minutes perhaps a little historical given Jobs, CPI and Retail Sales, but will at least offer insight into the potential for further rate hiking dissent.
EVENTS PREVIEW
Developments in the Persian Gulf continue to suggest a protracted impasse, which will keep energy prices elevated, above all refined products and gas, the latter being a particular challenge for Europe that remains well behind in its winter restocking efforts relative to typical seasonal patterns.
There is also little to suggest that Russia and Ukraine will ease back or even agree to desist from attacking each other’s energy, shipping and port infrastructure, though the rising internal political tensions in the Ukraine as popular former defence minister calls for elections adds a further level of complexity in assessing the conflict.
A somewhat busier day in terms of data and events has Australia Wages, Japan Orders and UK inflation data to digest, with Eurozone final CPI and Labour Costs along with South African CPI ahead, though the focus will more likely be on a July FOMC minutes and a speech by Lagarde. US retailers dominate the earnings schedule via way of Lowe’s, Target and TJX, with results from Baidu and Xiaomi to digest.
** U.K. – July CPI **
As expected, the 13% rise in the Household Energy Price Cap was the main driver of the as expected 0.3% m/m rise that pushed the y/y rate back up to 2.9% from 2.6%, though the impact was quite heavily offset by lower road fuel prices and airfares, the latter also a key driver of the 0.2 ppt fall in Services CPI to 3.4% y/y. Indeed, the BoE Services measure that excludes volatile regulated and indexed components actually rose on the month to 3.8% y/y from 3.6%, in a sign that services inflation remains rather sticky.
That said, PPI continues to show input price pressure easing (-1.7% m/m), even if that was largely energy related, though Output price pressures remain muted (0.2% m/m, 3.1% y/y), indicating very limited pass-through pressures. The divisions on the MPC are likely to remain, with the hawkish minority remaining concerned about sticky services pressures and energy price risks, while the dovish majority focuses on weak labour demand and no sign of pay pressures. The base case remains that the BoE will continue to hold rates into the end of the year.
** U.S.A. – July FOMC minutes **
The focus is likely to be on how many other FOMC members beyond the three dissenters were in favour of rate hike(s) going forward, given what Warsh called a ‘robust’ and ‘active’ discussion, and the fact that the prior meeting’s dot plot had nine looking for at least one hike this year. Clearly, some will see these minutes as rather historical in the wake of the weak labour data, small decline in CPI and unexpected Retail Sales setback, but the minutes at least offer some context in the absence of Warsh offering any forward guidance, and bear in mind that there are another set of labour and CPI data before the next FOMC meeting.
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