Weekly economic and financial commentary

Summary

United States: Is the Housing Drag Intensifying?

• Housing was the focus of attention this week as markets prepared for Chair Powell's speech at Jackson Hole. All told, upside surprises in existing home sales and housing starts during July conceal a weakening trend in residential activity.

• Next week: New Home Sales (Mon.), Durable Goods Orders (Tue.), Personal Income & Spending (Fri.)

International: Easing Bias and Uneven Global Data

• This week saw a mix of monetary policy decisions and economic data across G10 economies. The Reserve Bank of New Zealand delivered a dovish rate cut, while Sweden’s Riksbank held rates steady. In Canada, July CPI came in softer than expected, while UK inflation surprised to the upside. Meanwhile, Eurozone and UK PMIs showed modest improvement and Norway’s Q2 GDP pointed to strengthening momentum.

• Next week: Canada GDP (Fri.), India GDP (Fri.)

Interest Rate Watch: Powell Keeps Options Open for September Rate Cut

• With upside risks to inflation and downside risks to employment keeping the FOMC's dual mandate in tension, Chair Powell was careful not to pre-commit to a policy change at Jackson Hole. However, he kept the prospects for a September rate cut alive and reconfirmed the Committee's existing bias for rate cuts later this year.

Credit Market Insights: Hope Meets Headwinds

• Last month, the NFIB Small Business Optimism Index rose 1.7 points to 100.3, hitting just above the historical average of 98. While the headline suggests improved sentiment, elevated uncertainty weighs on small businesses.

Topic of the Week: The Forces Behind Stronger Productivity Growth

• Productivity growth is firming, driven less by labor shifts and more by technology, innovation and capital investment. Generative AI and R&D could lift it further, though trade policy and immigration constraints pose risks to sustaining long-term economic potential growth.

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