The world's top central bank chiefs gather in Jackson Hole next week against a jittery backdrop, half a year into the Iran war and with bond markets rattled by a selloff in long-dated U.S. debt that prompted U.S. Treasury intervention.
Away from Wyoming, there's plenty else going on, from inflation readings around the world and Nvidia's (NVDA.O) earnings to a South Korean rate decision and an Icelandic vote on whether to revive EU accession talks.
Here's all you need to know about the week ahead in financial markets, by Howard Schneider in Washington, Laura Matthews in New York, Stine Jacobsen in Copenhagen, Gregor Stuart Hunter in Singapore and Samuel Indyk in London.
1/ GOING FISHING
Big-think or red meat? That’s the choice Fed Chairman Kevin Warsh faces as he prepares a keynote address at the Fed's Jackson Hole symposium in Wyoming: expound on his ideas for reforming the central bank, or stick to the nuts and bolts of monetary policy and whether rates are headed higher.
As the gathering kicks off on Thursday, bringing together central bank chiefs from around the world, the audience for his remarks could hardly be more influential.
Warsh has spent his first weeks as chair focusing on long-term structural issues facing the U.S. economy. But investors, still digesting a bond selloff, are craving a steer about the here and now.
Warsh has been pretty clear he doesn’t want to show his hand, but he may find his no-guidance policy becoming a liability.
2/ INFLATION WATCH
The prolonged closure of the Strait of Hormuz and crude prices grinding higher are adding to concerns about the global inflation outlook.
Brent is headed for a second straight weekly gain and its sixth advance in eight weeks, but it's the surge in refined products that is drawing growing attention as the Northern Hemisphere heads towards the colder months.
European diesel prices have jumped more than 70% since the outbreak of war in February; U.S. gasoline is up 60%. With refining output curtailed in the Middle East, Russia, East Asia and beyond, energy-driven inflation looks here to stay.
A clearer picture of global inflation is due in the coming days, with data from Australia on Wednesday, and France, Spain and Tokyo on Friday. Particular focus will fall on the U.S. core PCE reading on Wednesday - expected to print above the Fed's 2% target for the 65th consecutive month.
3/ CHIP CHECK
The chipmaker, whose processors are central to AI development, is widely viewed as a barometer for both AI investment and broader tech sentiment. Its results could help determine whether enthusiasm for AI remains strong enough to support lofty valuations, after a recent tech selloff driven in part by rising bond yields.
Investors will focus on demand from major cloud providers, whose spending has fuelled Nvidia’s rapid growth. Signs that customers are ramping up AI deployments or spending plans could reinforce expectations that the investment cycle still has room to run.
4/SEOUL SEARCHING
South Korea's central bank meets on Thursday with markets watching for signs that policymakers are ready to follow up July's first rate hike in 3-1/2 years.
Inflation cooled to an annualised 2.8% that month, but still remains above target as demand for AI-related chips continues to support the economy.
Higher borrowing costs could add to pressure on South Korean stocks, still recovering from June's leverage-fuelled selloff, while also boosting the won , which has strengthened more than 10% this month.
Governor Shin Hyun Song has signalled a preference for keeping policy tight to contain inflation, suggesting another hike cannot be ruled out.
Elsewhere, Thailand's central bank meets on Wednesday, but with inflation far more subdued, few expect rates to move again this year.
5/TESTING EU WATERS, AGAIN
Icelanders head to the polls on August 29 in a referendum on whether to thaw out EU accession talks that have been on ice since 2013, when a eurosceptic government put them in the chiller.
It's not a vote on joining the bloc itself. Any eventual deal would still need a second referendum. For now, polls suggest the country is split right down the middle.
At stake are Iceland's rich natural resources, sky-high interest rates, a punishing cost of living costs and, increasingly, security concerns stirred by U.S. interest in neighbouring Greenland.
A "yes" vote would reopen thorny talks with Brussels, with fisheries likely the biggest obstacle. A "no" sends the EU question back into the deep freeze and dents the bloc's enlargement pitch.
