25/08/25

113

The upcoming week promises to be highly influential for financial markets, with several key events and data releases that could have lasting effects. Central to these is the speech by Federal Reserve Chair Jerome Powell at Jackson Hole, which is expected to shape expectations around monetary policy for months to come. Investors will scrutinize Powell’s messaging for indications on the future trajectory of interest rates, particularly in light of recent signals that rates may soon begin to decline.

Market reactions to Powell’s remarks could be amplified by ongoing domestic issues. Concerns over the Federal Reserve’s independence are resurfacing amid political pressures, notably from the former President, who has publicly attacked a Fed governor appointed by a previous administration. Such developments may influence the central bank’s decision-making process and reinforce fears about the politicization of monetary policy. Meanwhile, speculation continues regarding the size of the anticipated rate cut, with some market participants pushing for a more aggressive easing than the market currently expects.

On economic data, the release of the second-quarter GDP figures is anticipated to offer confirmation of a rebound, with an expected annualized growth rate of around 3%. This aligns with earlier estimates, although recent mixed economic signals suggest that the recovery may be more fragile than it appears. Alongside GDP, weekly jobless claims will provide further insight into the labor market’s health. While new unemployment filings remain historically low, an increase in ongoing claims could signal underlying weaknesses that might temper optimism about the economy’s robustness.

Inflation data will also be pivotal, with the core Personal Consumption Expenditures index due on Friday. The measure, closely watched by the Federal Reserve, has shown signs of persistent elevation, with recent readings above the central bank’s target rate. A continued upward trend in inflation could delay or complicate the Fed’s plans to cut interest rates, fueling uncertainty among investors.

Finally, end-of-month portfolio adjustments, coupled with a long holiday weekend in the U.S., may induce heightened market volatility and liquidity constraints. As these various factors converge, traders are advised to exercise caution amid the potential for unexpected market movements.