Jackson Hole kicks off after upside PCE surprise

In focus today

• In Norway, the focus will be on the GDP reading for Q2. Based on the current key figures, we expect that mainland GDP growth ended at 0.3% in Q2 (Cons: 0.3%, Prior: 0.20%). Hence, there is still no sign that tighter monetary policy is about to trigger a recession, but growth is probably lower than trend growth and will also be somewhat lower than Norges Bank assumed in its monetary policy report in June (0.4%).
• In the euro area, the minutes from the ECB's July meeting will be published today at 13:30 CET. They will reveal discussions from the meeting where the ECB held policy rates steady. We expect the minutes to show a bias for a rate hike in September, which is also fully priced in by markets. There will likely be limited signals beyond September, so it is not expected to be a market mover.
• In the US, Fed's annual Jackson Hole conference will take place. This year's topic is "Financial Innovation: Implications for Payments and Policy". The main market mover during the conference is Fed chairman Warsh's speech on Friday. Markets will look for any hints about monetary policy in September. We expect Warsh to continue his pattern of providing little to no forward guidance.
• In Japan, Tokyo inflation data for August will be released overnight. Japanese inflation has dipped below 2% due to energy subsidies. The domestic price pressure in Japan remains low, as inflation continues to be largely an imported phenomenon.

Economic and market news

What happened overnight

In China, industrial profits rose 17.6% y/y to CNY 4.58tn in the first seven months of 2026, slowing from an 18.7% increase in January-June. The moderation follows several months of strong profit growth around 20% y/y, supported by higher producer prices and solid manufacturing activity. The July slowdown was broadly expected, as producer prices fell back and PMIs pointed to weaker manufacturing momentum. Profits at state-owned enterprises increased 16.3% to CNY 1.49tn, while joint-stock companies posted a stronger 23.6% gain to CNY 3.55tn.

In geopolitics, reports suggest that Vladimir Putin is preparing to escalate attacks on Ukraine after peace talks reached a dead end and pressure over the war inside Russia increased. In addition, based on US intelligence, Russia is reportedly planning cyber-attacks or even small-scale ground operations against the Baltic countries, which are NATO members. Any ground incursion would mark a major escalation and could potentially draw NATO countries further into the conflict.

What happened yesterday

In the US, headline PCE inflation came in slightly above expectations at 3.7% y/y in July, unchanged from the previous month and above consensus at 3.6%. On a monthly basis, headline PCE rose 0.2% m/m versus expectations of 0.1%. Core PCE was in line with expectations at 3.3% y/y and 0.2% m/m. Markets reacted hawkishly to the print, with rates moving higher across both the short and long ends of the curve, while EUR/USD moved lower. Market pricing of a September Fed rate hike increased after the release.

In Sweden, PPI was unchanged for the second consecutive month in July at 0.1% m/m and 6.4% y/y. Import and export prices increased, while domestic prices declined. On the domestic market, the largest negative contribution came from lower prices for trade services of electricity. This was partly offset by higher prices for refined petroleum products, plastic products and fabricated metal products.

Equities: Equities were little changed on Wednesday, with both the S&P 500 and Stoxx 600 finishing broadly flat. A bit of wait-and-see mode ahead of Nvidia's earnings release, but beneath the surface a modest risk-on rotation was evident. Cyclical sectors such as technology and industrials gained close to 1%, while defensives including health care, real estate, and consumer staples lagged as investors rotated into higher-beta exposures.

Nvidia's earnings were the highlight of the day. Numbers were stellar, but the guidance even more impressive. Revenue grew 106% year-on-year in the quarter and comfortably ahead of consensus at 98% growth. Management guided for revenue growth of 70% in fiscal 2028, versus consensus estimates of 43%. While revenue growth still appears set to peak this quarter, the takeaway is that the deceleration now looks far more gradual than the market had anticipated. This message was reinforced during the conference call, where management continued to emphasize that this is supply constrained growth. In other words, revenue growth could have been even higher than 100% this quarter, and potentially above 70% next year, had production bottlenecks not limited shipments.

Tech-heavy Asian markets are responding positively this morning. South Korea's Kospi is up around 1.5%, while Shenzhen is gaining roughly 1%. US futures are also moving higher, pointing to gains of ~0.5% today.

FI and FX: The USD found support in somewhat stronger-than-expected PCE inflation reading, with EUR/USD dropping to 1.1650. US Treasuries sold off and gave back some of the past two days' gains yesterday, with yields rising 4-5bp across the curve. Meanwhile, also AUD found support in a strong inflation reading and on the back of this, markets are now discounting a full hike out of RBA for the September meeting. NOK/SEK is back at 1.02 after a couple of days of NOK pressure on the back of falling oil prices, now instead driven by a weaker SEK as EUR/SEK is once again challenging the strong resistance just above 11.10.