Written Commentary
ADM Reports Second Quarter 2026 Results
August 4, 2026
Escalating Persian Gulf tensions and unrelenting attacks on energy and shipping infrastructure in the Black Sea the focal point; digesting Australia Q2 GDP, South Korea CPI, RBNZ rate hike; awaiting US ADP Employment, Fed Beige Book and Bank of Canada rate decision.
- Japan: BoJ’s Ueda confirms rate hike to be debated at September meeting, but maintains need to consider impact of prior rate hikes.
- U.S.A.: Beige Book likely to continue to signal modest to moderate growth and continued outlook optimism, but likely to highlight renewed inflation concerns.
- Canada: BoC expected to hold rates again, assessment of risks from trade with US the primary point of interest.
EVENTS PREVIEW
Escalating tensions in the Persian Gulf, along with Russian officials refuting the possibility of a resumption of the long-defunct Black Sea grain deal, continue to keep energy prices elevated, with European gas prices testing the highs for the year as storage refills for the winter heating season remain way behind seasonal averages, and in turn pushing govt bond yields higher. It is worth repeating that with real yields returning to levels last seen before the GFC, there will be some investors looking at the very least at ‘dipping a toe’, if not debating some rebalancing their portfolios to a more favourable weighting for bonds.
These factors will remain front and centre for markets, with a busy run of central bank speakers and events likely to have greater influence than a modest schedule of data, which has slightly better-than-expected Australian Q2 GDP along with South Korea CPI to digest, ahead of US ADP Employment, Factory Goods Orders and the Fed’s Beige Book. New Zealand’s RBNZ hiked rates a further 25 bps to 2.75% as expected in a back-to-back move, but it also signalled that the pace of future hikes will be more gradual, effectively acknowledging that while inflation risks remain, underlying growth remains weak.
Of great significance were the comments from BoJ’s Ueda on the sidelines of the G20 meeting confirming that the September is meeting is live in terms of a further rate hike, though continuing to argue that the BoJ must also consider the impact of its 5 previous rate hikes as well as upside inflation risks. His ever-hawkish colleague Takata confirmed he will again vote for a rate hike in September (having been the sole dissenter in July) and suggested the BoJ may need to consider a larger rate hike, though this will remain very much an outlier perspective. Notably, the JPY saw little support in reaction to these comments, with markets clearly telling the BoJ that actions speak louder than words.
Canada’s BoC is expected to hold rates at 2.25% 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, but with core CPI measures remaining around its 2.0% target.
UK PM Burnham will also face his first Prime Minister’s Question Time in Parliament and likely face a good many questions about how he proposes to finance the many spending plans he has outlined in recent weeks, and all the more so given the latest rise in long-term Gilt yields.
** U.S.A. – Fed Beige Book **
The Beige Book appears likely to suggest a modest to moderate pick-up in economic activity, paced by manufacturing, as well as increasing business 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. The previous Beige Book observations on inflation noted that “prices increased moderately overall, with nine Districts reporting moderate growth, two robust growth, and one slight growth; compared with the last reporting period, price growth was the same or slower in all Districts.” But the recent rise in oil and refined products prices are likely to prompt a change to “Expectations for price growth over the coming months varied across Districts, with contacts in some expecting inflation to continue at its current pace, while contacts in others expected inflation to slow, in part due to falling fuel prices.”
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This material is provided for information purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any financial instrument. The views expressed reflect market conditions and publicly available information as of the date of writing and may change without notice. No representation or warranty is made as to the accuracy or completeness of the information. Past performance is not indicative of future results. Readers should consider their own circumstances and, where appropriate, seek independent financial advice.
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