Closing Recap (Week Ending August 22) 

U.S. stocks surged on Friday, with the Dow hitting a new record high, after Federal Reserve Chair Jerome Powell’s dovish-leaning comments at the Jackson Hole symposium ignited a powerful rally and sent September rate cut expectations soaring. The US Dollar tumbled in response, boosting gold, oil, and Bitcoin, which all saw significant gains for the day and week. 

Key Takeaways 

• Powell Sparks Broad Market Rally: Fed Chair Powell’s comment at Jackson Hole that a “shifting balance of risks may warrant adjusting policy” sent stocks soaring and the probability of a September rate cut from 70% to nearly 90%. 
• Stocks End Week Higher: The Dow closed at a fresh record high on Friday. For the week, the Dow (+1.5%) and S&-P 500 (+0.3%) gained, while the Nasdaq (-0.6%) saw a small loss due to earlier weakness in big tech. 
• Dollar Tumbles, Gold & Oil Jump: The US Dollar gave back all its weekly gains and more on Powell’s comments. The euro surged over 1% to its highest since late July, and the yen also strengthened. Gold and oil prices rallied on the renewed hopes for Fed easing. 
• Bitcoin Surges on Fed Hopes: Bitcoin jumped over $6,000 off its lows to trade near $117,000, a more than 4% gain on the day, as Powell’s comments boosted risk assets and liquidated nearly $380 million in shorts. 
• Small Caps Outperform: Small-cap stocks (Russell 2000) outperformed significantly on Friday, signaling broad market participation in the rally. 
• Week Ahead Focus – Key Risk Events: Crucial US data (Q2 GDP revision Thu, PCE Fri) will test the market’s dovish Fed narrative. Key Eurozone inflation data (Fri) and Tokyo CPI (Fri) are also in focus. 

Looking Ahead

Looking ahead, after the pivotal Jackson Hole speech, the market will turn its attention to key economic data to either validate or challenge the newly reinforced dovish Fed expectations. A relatively light week is headlined by the second estimate of US Q2 GDP (Thursday) and, more importantly, the PCE inflation data for July (Friday). The Fed’s preferred inflation gauge, the core PCE index, will be crucial. After recent hot PPI and mixed CPI prints, another sticky inflation number could complicate the narrative and weigh on the high probability of a September cut. 

Internationally, preliminary CPI numbers for August from Italy, France, and Germany are due on Friday, which will be important for gauging the European Central Bank’s next move. With markets pricing a very low probability of further ECB cuts, sticky inflation in the Eurozone’s largest economies could support the euro. Tokyo CPI figures for August (Friday) will also be in the limelight as they could influence the timing of the Bank of Japan’s next potential rate hike. Finally, Canada’s Q2 GDP data (Friday) will be watched closely after recent soft CPI bolstered the case for further Bank of Canada rate cuts.

Market Overview

U.S. equity markets, after several days of retrenchment in big tech, looked to bounce back on Friday with all eyes firmly on Fed Chair Jerome Powell’s speech at the Jackson Hole symposium. What started as a modest risk-on session exploded into a full-blown rally after Powell delivered the dovish cue the market was craving. His comment that a “shifting balance of risks may warrant adjusting the policy stance” was interpreted as a clear signal that a rate cut is coming soon. In response, the probability of a 25bps rate cut at the Fed’s September meeting skyrocketed from 70% to nearly 90%. This sent stocks soaring, with the Dow Jones Industrial Average closing at a new all-time high and breadth overwhelmingly favoring advancing stocks by a 9-to-1 margin. 

Index	Last Closing Level	Friday’s Change	Friday’s Change (%)	Weekly Change (%)
DJ Industrials	45631	846.24	0.0189	0.015
S&P 500	6466	96.74	0.0152	0.003
Nasdaq	21496	396.22	0.0188	-0.006
Russell 2000	2361	87.85	0.0386	NA

The dovish pivot from Powell had a dramatic impact across all asset classes. The U.S. dollar tumbled, giving back all of its weekly gains as the euro and yen surged against it. Gold prices immediately rallied on the news, not as a flight-to-safety trade but on the prospect of lower interest rates. Oil prices also extended gains, with the demand-side picture looking brighter on hopes of Fed easing. In the crypto space, Bitcoin surged, jumping more than 4% to an intraday high of $117,300. The sharp move took out significant short liquidity and renewed bullish sentiment, with some analysts suggesting the uptrend is back on track.

Economic Data Calendar (Week of August 25th)

MON (Aug 26): 

• NZ Retail Sales (Q2): Consumer spending data for New Zealand. 
• German IFO Business Climate (Aug): Key sentiment indicator for Europe’s largest economy. 
• US New Home Sales (Jul): US housing market data. 

TUE (Aug 27): 

• US Durable Goods Orders (Jul): Headline number expected to rebound after a sharp drop, but core orders (ex-transportation) provide a better look at business investment. 
• US CB Consumer Confidence (Aug): Important gauge of household sentiment. 
• US Richmond Manufacturing Index (Aug): Regional factory activity survey. 
• Bank of Canada (BoC) Gov Macklem Speaks: Commentary will be watched for policy hints after recent soft CPI. 

WED (Aug 28): 

• Australian CPI (Jul – Monthly): Important inflation read for the RBA. Annual rate expected to rise to 2.3% from 1.9%. 

THU (Aug 29): 

• Swiss GDP (Q2): Economic growth data for Switzerland. US Prelim GDP (Q2 – Second Estimate): 
• Expected to be revised slightly higher to 3.1% from 3.0%. 
• US Unemployment Claims (w/e Aug 24): Weekly labor market data.

FRI (Aug 30): 

• US PCE Price Index (Jul), Personal Income & Spending: The Fed’s preferred inflation gauge. Core PCE risks may be tilted to the upside after a hot core CPI. Crucial for September Fed decision. 
• Eurozone Prelim CPI (Aug – from Italy, France, Germany): Key inflation data for the ECB. 
• Japanese Tokyo CPI (Aug), Unemployment, Industrial Production, Retail Sales: A busy day of Japanese data; accelerating Tokyo CPI could increase BoJ hike bets. 
• Canadian GDP (Q2): A soft print could solidify the case for a BoC rate cut before year-end.

Commodities, Currencies, and Treasuries 

December gold futures rallied sharply on Friday following Fed Chair Powell’s dovish-leaning comments, with the contract settling up 1.09% at $3,418.50/oz. The move was driven by renewed expectations for Fed rate cuts rather than safe-haven demand. WTI crude oil futures also finished the week in the green, with the front-month contract gaining 2.71%, supported by demand-side hopes from potential Fed easing and supply concerns from stalled Ukraine peace talks. 

Asset	Last Level	Friday’s Change	Unit / % Change
WTI Crude	63.66	0.14	USD/bbl
Brent Crude	67.73	0.06	USD/bbl
Gold (Dec Fut.)	3418.5	36.9	USD/oz
EUR/USD	1.1724	0.0119	Rate
USD/JPY	146.84	-1.51	Rate
10-Year Note Yield	0.04258	-0.00074	Yield (%)
Bitcoin (approx)	~117,000	(Implied +4%)	USD

The U.S. dollar tumbled on Friday, giving back all of its weekly gains after Powell’s speech. The EUR/USD surged over 1% to its highest level since late July, trading near 1.1728. The USD/JPY pair also saw the dollar weaken significantly, falling 1.08% to 146.77. Bitcoin spiked over 4% to near $117,000 as the dovish Fed pivot boosted risk assets. U.S. Treasury yields fell, with the 10-year yield dropping 7.4 bps to 4.258%.