Market preview for the session ahead

Opening snapshot

Stocks steady while fixed income rewrites expectations

U.S. futures held their ground early on Friday following a week that saw technology names stumble and the S&P 500 record five straight daily losses. Traders are trading with thinner volumes because of the August calendar and that is amplifying sensitivity to incoming signals. The dollar has firmed to its best level in about ten days and two-year Treasury yields have risen to match levels last seen on August 1. Those moves reflect a re-pricing of policy risk as market participants reassess the probability of a Federal Reserve rate cut in September.

Fed focus at Jackson Hole

One speech could set the tempo for the quarter

All eyes are on the keynote address by Federal Reserve Chair Jerome Powell at the Jackson Hole symposium. The message that Powell chooses will matter because the futures market has reduced the chances of a September rate reduction to roughly seventy percent from the near certainty that traders had assigned only weeks ago. Recent public remarks from several Fed officials have raised doubts about an imminent easing cycle. Cleveland Fed boss Beth Hammack, Atlanta president Raphael Bostic and Kansas City president Jeffrey Schmid have each signaled caution about cutting rates next month while inflation readings remain above target and business surveys indicate renewed activity in the economy.

Minutes from the latest policy meeting and a string of Fed speeches suggest there is no quick consensus in favor of a change in stance. Powell is expected to address the framework review and to defend the institution’s independence. A firm message that leans toward patience would validate the hawkish repricing in short-term yields. On the other hand, any hint of a clearer path to easing would likely trigger sharp market responses because positioning had shifted to expect easier policy.

Asia update

China surges while Japan contends with politics and rising yields

Chinese equities are providing one of the brightest spots this morning. The Shanghai benchmark has reclaimed the 3,800 level for the first time in a decade. Momentum has been led by technology stocks, with the STAR 50 index jumping almost eight percent on Friday and posting gains approaching twenty five percent over the past month. Beijing is stepping up support for domestic chipmaking and AI ventures, and the launch of a new model from a local AI startup has further stoked investor enthusiasm. Reports that regulators are softening their stance on digital asset projects helped lift fintech and stablecoin concept names.

Japan, by contrast, is wrestling with political uncertainty that is spilling over into its bond market. Softer domestic inflation data weighed on the yen, which weakened to its weakest point since August 1. At the same time, long dated yields are under pressure. Ten year government bond yields are at their highest levels since 2008 and thirty year yields have climbed to record highs. Political calls for Prime Minister Shigeru Ishiba to step down after recent electoral setbacks have created a risk premium that could come into sharper focus when the ruling party releases a report on the election performance next week.

Europe and global policy risks

Trade details and headline risks are guiding flows

European equities were firmer on Friday even though some macro data and geopolitical stories have lost steam. Optimism around details of a U.S. EU framework trade agreement has supported auto and pharmaceutical stocks in particular. That upbeat tone was not universal. Poland’s WIG index posted its largest drop in more than four months after the government proposed an increase in the corporate income tax rate. Elsewhere, last weekend’s hopes for a Ukraine peace deal have cooled and Germany’s second quarter GDP was revised lower. Geopolitical headlines also require attention. Reporting indicates that top level Kremlin demands for Ukraine would be extensive if talks advance. That kind of shock would reshape regional risk assessments and have implications for commodity and defense related names.

Market movers and events to watch

Key data points, corporate reports and policy moves on the radar

Traders will monitor Canada retail sales for an early read on consumer resilience north of the border. The main focal point is the timing and tone of Powell’s Jackson Hole remarks, scheduled for mid morning U.S. time. Boston Fed President Susan Collins will also speak and could add texture to how regional policymakers view the outlook. On the corporate calendar, earnings from Workday will be among the larger U.S. releases that can influence sentiment in software and enterprise names.

Beyond economic and earnings data, policy decisions are capturing attention. Bloomberg and Reuters sourced reports suggest the Trump administration is considering reallocating at least two billion dollars of CHIPS Act funding toward critical minerals projects. That potential reallocation speaks to the growing priority placed on domestic supply chains and strategic sectors. Market participants will also be following any new commentary or leaks that could change the perceived balance of policy support for technology and manufacturing investments.

Trading implications and positioning

Prepare for acute moves and manage risk around key headlines

With thinner August liquidity and a major Fed speech on the schedule, traders should expect elevated intraday volatility. Fixed income traders have already moved to price a later easing cycle. Equity investors will be watching leadership within the S&P 500 after technology underperformed through the week. Currency traders will keep a close eye on the yen and the dollar as risk appetite and central bank expectations evolve. Portfolios that are heavy in rate sensitive assets should be stress tested for scenarios where Powell signals caution and where growth surprises keep inflation elevated.

Longer term themes remain intact for those willing to look past the headline noise. Chinese policy support for domestic technology could sustain the rally in local tech names. Global industrials and exporters will be sensitive to trade agreement details and municipal or national tax proposals that affect profitability. Finally, geopolitical developments and budget reallocations tied to strategic sectors could create pockets of opportunity and risk.

Today will likely be judged by what Powell says and how succinct his message is about the Fed’s path. That single address could dictate risk preferences for the coming weeks and will determine which stories, from China tech exuberance to Japanese political uncertainty, carry the most weight for global markets.

Events to watch this session include Canada retail sales at 8 30 AM Eastern, the Jackson Hole keynote at 9 00 AM Eastern, and Workday earnings later in the day.