The Week Ahead: Jackson Hole reaction, nonfarm payrolls & semiconductor earnings

Reaction to Fed chair Kevin Warsh’s remarks at Jackson Hole will continue to drive the market ahead of the FOMC’s meeting of 15/16 September. At the end of the week the key August nonfarm payrolls report will show whether the Fed needs to have any concerns about the labour market. Tech earnings continues with semiconductor stock Broadcom and cyber security firm Palo Alto Networks among the highlights. Canada and New Zealand have interest rate decisions in focus and Eurozone CPI inflation will be watched ahead of an expected rate hike later this month by the European Central Bank.

Here’s the key things to watch over the next week.

Monday, 31 August

Reaction to Warsh’s Jackson Hole speech will drive the tape on Wall Street, particularly the bond market. UK markets are closed for the late summer bank holiday so it’s going to be quiet in London, but there are some economic releases to watch for FX crosses – Japan's preliminary industrial production and retail sales figures; China’s manufacturing and non-manufacturing PMIs plus Germany’s preliminary CPI inflation data – a key leading indicator for the Euro area report later this week.

Tuesday, 1 September

The main focus on the economic calendar is the flash estimates for CPI inflation in the Eurozone during August. July’s data showed inflation ticking up to 2.9% from 2.8% in June, underlining the hawkishness we have seen from the European Central Bank and expectations for it to raise rates again at its September meeting. The ECB's Isabel Schnabel said the central bank might need to characterise growth risks to the upside, such has been the resilience of the Eurozone economy in the teeth of the US-Iran war. Last week data showed Germany’s economy grew 0.3% in Q2 2026, revised up from 0.2%.

Palo Alto Networks reports fiscal 2026 Q4 earnings. Revenues at the cybersecurity firm reached $3.0 billion in Q3, a 31% increase year-over-year. At its last earnings it guided Q4 revenues to be between $3.345 billion and $3.355 billion, with non-GAAP EPS between $0.96 and $0.98. In the UK, distribution and outsourcing company Bunzl reports half-year results.

Wednesday, 2 September

Broadcom earnings form the next test of sentiment for the AI trade, with the semiconductor name reporting fiscal third quarter results after the market close. Expectations are running high, particularly in the wake of the Nvidia earnings beat. Q2 revenues rose 48% year-on-year to $22.2 billion while AI semiconductor revenue grew at a staggering +143% to $10.8 billion. Management has guided Q3 revenue of around $29.4 billion, which would see growth reaccelerating to more than 80% Yoy, with AI semiconductor revenue growth picking up the pace to more than double. Elsewhere, Hewlett Packard Enterprise and Snowflake are also due to report earnings.

On the macro level, we look to central bank decisions from Canada and New Zealand. With inflation running above 4%, the Reserve Bank of New Zealand is likely to raise rates by 2bps to 2.75% at the meeting with its projections expected to show a 3% level for its benchmark OCR rate of 3% by the end of the year. For the Bank of Canada the calculation seems to be moving in the opposite direction after the collapse of trade talks with the US leading to a fresh round of tariffs. The BoC is expected to stand pat on rates this time and will be watching closely the shift in trade negotiations.

Thursday, 3 September

Markets will be largely focused on a range of economic releases, particularly the US ISM services PMI and weekly unemployment claims data. Earnings season is almost over but watch for Lululemon and Docusign, while in the UK we have half-year results from M&G.

Friday, 4 September

Following the inflation data and Jackson Hole meet the focus for Fed watchers swings to the latest report on the US labour market. An unexpectedly soft print for July left market participants trimming expectations for a rate hike in September. July's nonfarm payrolls showed a drop of -23k jobs and more than -100k in downward revisions. And while the unemployment rate declined to 4.1% this was due to a decline in participation. Worker pay was virtually flat over the month with the 12-month increase in average hourly earnings sliding to +3.2%, the lowest since May 2021.

As noted previously however, the breakeven employment rate has changed dramatically, which has implications for these monthly jobs reports. 

The Fed itself notes that "employment growth in any given month is almost as likely to be negative as it is to be positive. Furthermore, these negative prints of job growth could be large in any given month [...] it would not be unusual for there to be one or more months in 2026 with declines in total payroll employment as large as -100,000 jobs, even if economic output was growing at the rate of potential output growth.”

The –23k print therefore should come as not entirely unexpected even if the economy if rattling along just fine. The average of the last 12 months is now +34k, which is still above the zero-line implied by the Fed's research as being just fine. The market will want to know if there is any reason the Fed needs to be worried about the labour market Despite the well-known shift in the employment breakeven rate and the persistently high inflation level, coupled with uncertainty over the Fed’s reaction function and framing of the current outlook, another negative read would probably see the market all but price out a rate hike at the September FOMC meeting.