Fundamentals Macro Data:
Inflation
USD CPI YoY
Inflation had been in a downtrend until March, where iran conflict cause Hormuz to be closed and oil spiked to the upside, causin inflation pressure to the upside. In the last 2 month, inflation came out lower than anticipated, and are decreasing since June 10 data at a max of 4.2% YoY.
Unemployment Rate
Unemployment rate is better than expected. 2 consecutive decrease to 4.1%.
NFP
NFP has been weak in the last 2 month. Both data came up lower than anticipated. Last one came out negative at -23K.
ISM Manufacturing PMI
Today’s data printed weaker than expected, but overall still well above 50, signaling growth.
Story line
•Fed rate decision, Hold at 4.50%.
•Probabilities were 66% hold, 33% hike.
• Kevin Warsh gave no forward guidance, but he was less hawkish than expected → which reflected on the fedwatchtool for September meeting where it was priced in a 25% of 2 hike in september which dropped to less than 1% after the press conference (which confirms Kevin Warsh is less hawkish than expected).
01-02 August 2026 (Weekend)
•Trump announced that he cancelled strikes on Iran over the weekend → reducing the premium due to geopolitics → great for risk-on assets (amplifying Kevin Warsh risk-on sentiment).
•NFP came out at -23K vs 85K anticipated.
•Unemployment rate 4.1% vs 4.2%
•Mixed data, but overall not pushing towards a hike → Probabilities of a hike in September decreased with NFP news.
•Hormuz tensions → risk-off
•both sides claiming to have control over strait of Hormuz
•Trump says no discussion with Iran planned
•Hormuz optimism (Iran and Oman working on an agreement)
•Kevin Warsh speaks at Jackson Hole Symposium → focus on inflation → more hawkish than expected.
•Probabilities of a hike grows to 57% from 35%. Significantly increasing probabilities of a hike in September.
29-30 August 2026 (Weekend)
•USA strikes Larak Island (Iran). Iran answers and strikes 2 US bases in Jordan.
•US Official: US strikes Iranian targets in the Strait of Hormuz area in response to Iranian attacks on ships - N12 News' Ravid.
•Trump: If Iran retaliates for this very justified attack, they will be hit again at a much harder and higher level - Truth Social
•USOIL +5.09% → above $90 per barrel → will cause inflationary pressure
September 03 2026 (12h before NFP)
•Stop escalating but still some drone attacks here and there.
•Probabilities of Fed hike diminished due to Waller comments→ Equities up
•BoJ intervention → DXY lower → equities up
September 04 2026 (NFP morning)
NFP Blueprint
•Range of estimates: -25K to 121K
•Most clustered: 30K to 70K
Average Hourly Earnings M/M
•Friday August 28 2026, at Jackson Hole symposium, Kevin Warsh delivered an Hawkish speech → increasing probabilities of a hike to 67% from only 35%.
•Thursday September 03 2026, Christopher Waller (fed member) delivered a dovish speech: “””Waller then argued that the three-month annualised inflation trend, down to 3.05% from 4.76% in February, was a more reliable guide than the headline annual figures, and said the pace of that improvement was "encouraging.””””
•FedWatchtool (September) currently: 48% hold / 52% hike
•US–Iran, strikes in the beginning of the week, seems to not continue.
•Inflation remains the dominant variable: strong labor data alone is unlikely to push the Fed to hike if next week's CPI comes in soft.
•On the other hand, weak job data will automatically restrain fed’s capacity to hike.
If NFP near 56K:
I don’t think much will happen
If NFP < -25K:
Have to distinguish weaker data that would deter the Fed from raising rates and data signaling a genuine economic slowdown.
