Written Commentary
ADM Reports Second Quarter 2026 Results
August 4, 2026
Persian Gulf developments still in flux, busier day for statistics has China Trade, German Production, French Unemployment to digest ahead of US and Canada labour reports; Fed’s Barkin follows on from hawkish Musalem.
- China: trade continues to be mainstay of growth, though volume growth a lot weaker, as chips, energy and commodity prices inflate headline growth.
- U.S.A.: Payrolls seen posting slightly higher though still modest increase, Unemployment Rate and Average Hourly Earnings seen unchanged, some focus on distorted Participation Rate.
EVENTS PREVIEW
Developments in the Persian Gulf remain front and centre, as do the situations in the Red and Black Seas, and while there is some hope of a partial re-opening of the Strait of Hormuz following the ‘in principle’ agreement between Iran and Oman, but that is still subject to the key condition of the US blockade being lifted, with a resolution of the broader conflict between the US and Iran remaining a distant prospect.
There is a fairly busy run of statistics to end the week, headlined by the monthly US labour market report and China Trade, but Japan Household Spending, German Industrial Production, French and German Trade also feature alongside Canada’s Unemployment and Wages. A more modest run of corporate earnings features Eneos, Inpex, Japan Post, Allianz and Munich Re amongst others.
** China – July Trade Balance **
China’s economy continues to be primarily supported by the strength of external demand, with exports slightly above forecast at a very robust 23.9% y/y, while Imports undershot a forecast of 29.7% at 27.5% y/y, and this despite typhoon related disruptions at ports. Export strength continues to be focused in AI and clean energy related sectors, which is heavily offsetting weakness in traditional ‘old’ manufacturing sectors.
That said, semiconductor, energy and commodity inflation has boosted both exports and imports (export prices up 8.0% y/y, Import Prices up a whopping 25% y/y), with volume data showing Imports increasing just 4.0%. Semiconductors and autos continue to be key drivers for exports rising 117% and 60% yr/yr respectively, while crude oil imports fell 24% y/y though better than June’s -41% y/y.
China’s key weakness remains the weakness of domestic demand, and there is good reason to be sceptical that the latest measures will turn that trend around on a sustained basis.
** U.S.A. – July Non-farm Payrolls, Unemployment **
This week’s run of labour data has largely chimed in with the impression that hiring has lost some momentum since the start of the year, layoffs remain modest, overall pointing to a stable market.
Non-farm Payrolls are expected to pick up modestly to 80K vs. June’s 57K, with Private Payrolls marginally stronger at 82K, while the Unemployment Rate is seen holding at 4.2%, as are Average Hourly Earnings at 0.3% m/m, 3.5% y/y. After last month’s plunge, there will be a good deal of focus on the Participation Rate, that if forecast to edge up fractionally to 61.6% from a 5-r low of 61.5% in June. That drop looks to have been paced primarily by those being laid off (still low on any historical comparison) choosing to leave the labour force, and is being distorted by outdated population estimates; the fact that the Unemployment Rate has been steady also implies it is less of a concern.
Be that as it may, if forecasts are correct, then the employment pillar of the Fed’s mandate should remain subordinate to the fact that inflation has overshot its target for the past 5 years.
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