By Ahmad Assiri, Research Strategist at Pepperstone
Global markets traded in subdued fashion yesterday, with anticipation rather than conviction driving asset flows. In the absence of meaningful economic catalysts, attention shifted firmly to geopolitics, from the Alaska to White House meetings with European leaders and ahead of the upcoming trilateral gathering.
At the same time, investors are looking toward the Jackson Hole symposium, which increasingly stands as an important juncture for monetary policy guidance.
Geopolitics Take Center Stage
Investor focus was firmly anchored on political developments after US President Donald Trump convened a meeting with Zelensky and several European leaders, following his prior engagement with Russian President Putin in Alaska. While no clear breakthrough was announced, the mere act of dialogue suggested Washington is at least exploring a channel toward de-escalation and the prospect of a negotiated settlement in the Russia-Ukraine co
Energy markets reacted only modestly. Brent eased slightly but held the $66/bbl handle, with price action restrained by waning fears of additional US sanctions on Russian oil flows, particularly those routed to India. Gold, meanwhile, staged a sideways rebound from its lowest levels since the early-month US payrolls report. The move reflects an underlying conviction that structural support for gold remains intact, such as looming Fed easing, inflation concerns and the reemergence of recession pricing for the coming quarters.
Jackson Hole
Markets are now focused on Fed Chair Jerome Powell’s speech at Jackson Hole at week’s end. Futures currently assign an 84% probability of a 25bp cut in September, down from 98% last week, signaling caution around softening inflation and weaker labor market prints.
A dovish Powell could support equities. Conversely, a more measured tone risks a pullback in risk assets. The likely outcome is a data-dependent stance with Powell avoiding a firm pre-commitment to specific path of cuts.
Wall Street, calm headlines and selective moves
State side, headline indices ended flat, the Dow down 0.1%, the S&P 500 unchanged and the Nasdaq marginally higher. Beneath the surface, moves were more nuanced. The Russell 2000 gained 0.3%, lifted by clean energy stocks on optimism around tax credits. Tech lagged, led by a >2% drop in Meta. Meanwhile, UnitedHealth rebounded from its lowest levels since 2020 after Berkshire Hathaway disclosed a quiet build-up of a stake. The stock had shed more than half its market value this year due to higher costs, tariff headwinds and structural pressures, making Berkshire’s contrarian entry both complex and compelling.
Stagflation risks re-enter the conversation
Structurally, talk of stagflation risk is resurfacing. A recent Bank of America survey showed more than 70% of investors expect below-trend growth alongside elevated inflation in the next 12 months, a scenario that reshapes asset allocation logic. While this doesn’t capture the full spectrum of sentiment, it highlights a structural unease that sits in contrast to the record highs seen across markets. Risk managers, unsurprisingly, remain the least celebrated voices at peaks
Dollar and Yields
The dollar index DXY was steady around 98, while 10-year US Treasury yields edged up to 4.33% and 30-year yields climbed above 4.93%. These muted shifts reflect investors’ reluctance to move ahead of Powell’s speech. The VIX volatility index fell to 15, underscoring that short-term risk of dislocation looks lower now than earlier this month.
Looking Ahead
Beneath yesterday’s calm lies a market in wait-and-see mode. Positioning suggests investors are holding back ahead of a potential inflection point, monetary easing and persistent inflationary pressures coupled with a weakening labor market. Today’s data calendar is light on top-tier releases, with US housing permits and Canada’s CPI in focus, the latter expected to show relative stability.