Morning Brew August 25 2025

Good morning!

What a day! Powell certainly moved markets with his speech at Jackson Hole. The central message was that he is more concerned about the labor market than inflation. Traders focused on two main points:

1. Given the recent disappointing labor market data, the Fed might cut rates in September.
2. With the focus shifting away from inflation, asset prices are likely to increase, or the fiat USD might lose value.

The key question is: Did Powell cave to Trump's demands for lower rates by shifting the Fed's attention from inflation to employment? Many commentators seem to avoid this issue, but Reuters explored it here

Interestingly, there was only a slight change in Fed rate expectations. Trading showed 80% favorability for a 25 basis points cut in September and 20% for no action. The year-end rate is projected to be -46 basis points. Meanwhile, 10-year and 30-year yields dropped to 4.88% and 4.25%, respectively—not a massive move. Other assets were more interesting:

• The S&P 500 gained 97 points, or 1.5%, ending at 6,466 points.
• The Nasdaq rose nearly 400 points, or 1.9%, reaching 21,496.
• The Dow Jones Industrial Average ended the day up 841 points, or 1.88%, at 45,626—a new record.
• The Russell 2000 climbed nearly 4% to 2,362.

The S&P closed the week just below its all-time high. Notably, Google rose 3.4%, Tesla 6.2%, and Intel 4.2%. UBS has now raised its target for the S&P to 6,600 by year-end and 6,800 by mid-2026. Trading volumes were substantial, with 17.8 billion shares traded, up 6 billion from Thursday.

The USD was the major loser of the day, shedding 1%. EURUSD ended at 1.1720, Cable rose 0.85% to 1.3515, and USDJPY reached 146.90. Silver gained almost 2%, and gold was up 1%. Ethereum surged almost 14%, while Bitcoin increased 3.8%.

Donald Trump announced on Friday that the U.S. would acquire a 10% stake in Intel under a deal with the struggling chipmaker. Interestingly, he praised Lip-Bu Tan shortly after asking him to step down. During Powell's speech, Trump also announced he would fire Federal Reserve Governor Lisa Cook if she doesn't resign, further escalating his rift with the central bank.

Canada declared it would remove import tariffs on U.S. goods and intensify trade talks with the U.S.

Keurig Dr Pepper just announced  it will buy Dutch coffee company JDE Peet's for 15.7 billion euros

What can we expect for the week ahead?

We'll see data releases for:

• U.S. Durable Goods Orders
• Consumer Confidence
• PCE Deflator on Friday, which may be a crucial indicator for inflation.

Earnings:

Several second- and third-tier companies will report earnings, with top mentions including Nvidia on Wednesday and Alibaba on Friday.

Ukraine:

The U.S. appears to be pressuring Ukraine into reaching an agreement with Russia to end the war, potentially opening the door for Trump’s Nobel Peace Prize. This pressure is reflected in JD Vance’s statement: “If you go back to World War II, World War I, or any major conflict in human history, they all end with some kind of negotiation.”

U.S. Politics:

Trump's moves have led to heightened tensions. The National Guard mobilized to patrol DC will now carry weapons, indicating further escalation.

Many assets remain at or near highs. If risk sentiment continues and fears of currency devaluation persist, we could see strong moves higher. Prudent risk management is essential, as sentiment can change quickly.

Upcoming Events:

Monday, August 25

• DE IFO Index
• US: New Home Sales (July)
• Earnings: Trip.com, PDD

Tuesday, August 26

• US: Durable Goods Orders, Consumer Confidence
• Earnings: Flughafen Zürich PetroChina,

Wednesday, August 27

• Australia: CPI
• Earnings: HP, Nvidia

Thursday, August 28

• EU: ECB Consumer Confidence
• US: Weekly Jobless Claims, GDP
• Earnings: Dell

Friday, August 29

• Japan: CPI
• France: CPI
• Swiss: KOF
• DE: Unemployment
• Canada: GDP
• US: PCE & University of Michigan
• Earnings: EMS Chemie, Alibaba