Weekly economic and financial commentary

Summary

United States: Proceed with Caution

• It was yet another busy week for the U.S. economy, and eyes are on all data prints as the FOMC's September meeting looms closer. An underlying theme in recent prints of economic data has been to proceed with caution. Amid a softening labor market, strengthening inflation, tariff uncertainty and potential changes to the FOMC, it is more difficult than usual to gauge future economic risks.

• Next week: ISM Manufacturing (Tue.), ISM Services (Thur.), Employment (Fri.)

International: Soft Spots and Strong Prints in Global GDP Data

• This week’s Q2 GDP releases highlighted diverging global growth outcomes. Canada’s GDP disappointed, while Switzerland’s Q2 GDP softened, in line with expectations. On the flip side, Sweden and India posted stronger-than-expected growth, while on the price front, Australian inflation surprised to the upside.

• Next week: China PMIs (Sun.), Australia GDP (Wed.), Japan Labor Cash Earnings (Fri.)

Interest Rate Watch: Loud Fed Headlines, Quiet Markets

• Markets showed a muted reaction to President Trump's dismissal of Federal Reserve Governor Lisa Cook this week. The effort is not expected to change the near-term course of monetary policy, but risks protracting the FOMC's ongoing battle to return inflation to its 2% target.

Credit Market Insights: Banks Report Further Tightening in Lending

• The recently released Q2 SLOOS report found that U.S. banks continued to tighten lending standards across most business and household loan categories. Demand for loans generally weakened, while lending standards remained on the tighter end of historical ranges.

Topic of the Week: The State of Agriculture

• Farmers and ranchers appear to be on solid financial ground at present, bolstered by firm livestock cash receipts, a modest reduction in expenses and increased government support from the 2025 Farm Bill. Looking ahead, a less restrictive stance of monetary policy should help reduce financing costs for agricultural borrowers.

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