TMGM Daily Market Breakfast: 29 August 2026

Morning Snapshot

• Federal Reserve Chair Kevin Warsh said the Fed still has "work to do" on inflation, prompting markets to lift the implied probability of a September rate hike to about 56%-57% from roughly 35%-36% before his Jackson Hole speech.
• Cleveland Fed President Beth Hammack said it was time for the Fed to act with rate hikes, adding to a broader hawkish tone from U.S. policymakers.
• Japan’s latest inflation and labour data strengthened expectations of a Bank of Japan move next month, with Tokyo inflation at 1.9% and core inflation excluding fresh food and energy at 2.0%, while market-implied odds of a September hike were cited at about 84%.
• ECB officials and recent euro-area inflation readings kept September tightening expectations in focus, with French CPI at 2.4% year on year, French HICP at 2.7%, Spanish CPI at 4.3% and euro-area economic sentiment at 98.4 in August.
• Bank of England Governor Andrew Bailey said he did not see significant second-round inflation effects in the UK ahead of the BoE’s next policy meeting.
• Canada’s economy grew 0.8% quarter on quarter in the second quarter, accelerating from a revised 0.1% increase in the first quarter, while trade tensions with the United States continued to cloud the outlook for cross-border sectors.
• Middle East tensions and disruption through the Strait of Hormuz kept energy supply risks elevated, with Qatar extending force majeure on LNG exports and Brent previously settling 2.1% higher as U.S.-Iran diplomacy stalled.
• Iran condemned new U.S. economic measures as "state terrorism" and urged other countries not to implement Washington’s sanctions.
• Evernorth Holdings moved closer to a Nasdaq listing after the SEC declared effective the registration statement tied to its proposed merger with Armada Acquisition Corp. II, with an Armada shareholder vote scheduled for September 30.

Market Developments

Foreign Exchange

The U.S. Dollar Index rose about 0.36% to around 99.50 after Kevin Warsh’s Jackson Hole remarks, while EUR/USD fell toward 1.1595, GBP/USD traded around 1.3538 and the Mexican peso weakened more than 0.42% against the dollar.

Commodities

Gold fell more than 0.42% as the dollar and U.S. yields strengthened, while Brent had settled 2.1% higher earlier as prospects for renewed U.S.-Iran talks faded and supply risks around the Strait of Hormuz remained in focus.

Macroeconomics & Central Banks

Warsh’s Jackson Hole Speech Reprices September Fed Expectations

Federal Reserve Chair Kevin Warsh used his Jackson Hole speech to keep inflation at the centre of U.S. monetary policy, saying policymakers still have “work to do” if they are not confident that underlying inflation is moving back toward target. He said the Fed’s 2% Personal Consumption Expenditures inflation target remained “firm and fixed,” argued that recent summer inflation readings were better than expected but not enough to prove a meaningful shift in underlying price dynamics, and said he would be hard-pressed to describe current financial conditions as restrictive.

Warsh also gave a relatively upbeat assessment of the U.S. economy, describing consumer spending as healthy, the labour market as stable and business investment as rapidly increasing. Markets responded by sharply repricing the near-term policy outlook. Articles citing CME FedWatch data said the implied probability of a September rate hike rose to about 56%-57% after the speech, up from roughly 35%-36% beforehand.

The repricing supported the dollar across major currency pairs. The U.S. Dollar Index rose about 0.36% to around 99.50, EUR/USD fell toward 1.1595, GBP/USD traded around 1.3538, the Mexican peso weakened more than 0.42% against the dollar and gold fell more than 0.42% as U.S. yields and the dollar moved higher.

Hammack Says Fed Should Move With Rate Hikes

Cleveland Federal Reserve President Beth Hammack said it was time for the Fed to act with rate hikes, arguing that waiting would create pain. Her remarks added to the hawkish tone already surrounding Jackson Hole and reinforced the sense of division inside the Fed over how restrictive policy currently is.

Earlier commentary cited in the reporting window showed that some officials still see the need for more restraint to return inflation to target, while others have been more comfortable waiting for additional evidence on whether price pressures will persist.

Japan Data Keep September BoJ Move in Focus

Japan’s latest inflation and labour data were reported as strengthening the case for a Bank of Japan rate increase next month. Greater Tokyo inflation was cited at 1.9% in August, while inflation excluding energy and fresh food was 2.0%. Service-sector inflation was reported at 0.39% in August, its highest level in nearly a year, with recent three-month annualised readings pointing to accelerating price momentum.

Market-implied odds of a September move were cited at about 84%. Even so, Bank of Japan officials were described as avoiding firm guidance on timing, with Deputy Governor Himino not getting specific in recent remarks. The yen was reported weaker for a fifth consecutive session despite the data backdrop.

ECB Officials Signal Vigilance as Inflation Firms

European Central Bank officials and recent inflation data kept September tightening expectations alive. Austrian National Bank Governor and ECB member Martin Kocher said Europe’s economy showed more momentum and posed threats to price stability, while other ECB voices were described as leaning hawkish on the need to prevent above-target inflation from becoming entrenched.

National inflation readings reinforced that backdrop. French CPI accelerated to 2.4% year on year in August from 2.1%, French HICP rose to 2.7% from 2.4%, and Spanish CPI increased to 4.3% from 3.6%, with energy and fuel prices cited as key drivers. Euro-area economic sentiment for August rose 1.3 points to 98.4, while the EU indicator increased 1.0 point to 98.2.

Research commentary in the reporting window said markets were increasingly focused on a 25 basis-point ECB increase at the 10 September meeting to 2.50%, while also highlighting Brent and Dutch TTF gas prices as important inflation inputs for the policy outlook.

Bailey Says UK Second-Round Inflation Effects Remain Muted

Bank of England Governor Andrew Bailey said he did not see significant second-round inflation effects in the UK in comments to Bloomberg TV at Jackson Hole. The remarks came ahead of the Bank of England’s next policy meeting and suggested some restraint about the breadth of domestic inflation spillovers even as global energy risks remain elevated.

Canada’s Second-Quarter Growth Accelerates Despite Trade Strains

Statistics Canada reported that gross domestic product grew 0.8% quarter on quarter in the second quarter, a sharp acceleration from a revised 0.1% increase in the first quarter. The first-quarter figure had previously been estimated at 0%.

At the same time, trade tensions between Canada and the United States remained a significant risk to the outlook. Commentary during the reporting window said Section 338 tariffs and Canadian countermeasures were putting pressure on specific sectors, regions and cross-border supply chains, particularly autos, even as baseline economic outlooks for both countries remained broadly stable.

U.S. Jobs Benchmark Revision Draws Attention to Labour-Market Revisions

Investors were also watching the annual benchmark revision to U.S. nonfarm payrolls, a labour-market update that has gained importance after large revisions in recent years. The reporting window highlighted the release as a key reality check for the underlying strength of U.S. employment data, even though detailed benchmark figures were not included in the retained coverage.

Geopolitics, Energy & Commodities

Hormuz Disruption and Qatari LNG Force Majeure Keep Energy Risks Elevated

Supply risks linked to the Strait of Hormuz remained a central market theme. Reporting during the window said traffic through the waterway was still heavily constrained, while Qatar extended force majeure on LNG exports to European and Asian buyers, keeping a major source of global gas supply offline.

The disruption was described as a direct risk to Europe’s winter gas balance, with LNG prices already close to double pre-war levels. Continued constraints were also seen intensifying competition between Europe and Asia for alternative cargoes, raising import costs and reviving inflation pressure through energy and industrial channels.

Oil markets were also reacting to the same geopolitical backdrop. Brent had settled 2.1% higher earlier after reports that prospects for renewed U.S.-Iran talks had faded. One report said flows through Hormuz were assumed to be averaging about 5 million barrels a day, while inventories had so far cushioned the impact of reduced oil flows. Alternative supply discussions, including U.S. talks over a stake in Venezuelan oil fields and the possibility of Venezuela leaving OPEC, were cited as longer-term shifts rather than immediate relief.

Iran Condemns New U.S. Economic Measures

Iran condemned new U.S. economic measures, describing Washington’s sanctions policy as “state terrorism” in a Foreign Ministry statement cited by Reuters. Tehran called the measures illegal and reprehensible, urged other countries not to implement U.S. sanctions and appealed to the international community and United Nations bodies to act against Washington’s actions.

Corporate Developments

Evernorth Advances Toward Nasdaq Listing After SEC Clearance

Evernorth Holdings moved closer to becoming a publicly traded company after the U.S. Securities and Exchange Commission declared effective the registration statement tied to its proposed business combination with Armada Acquisition Corp. II. The clearance allows Armada shareholders to vote on the transaction at a special meeting scheduled for September 30.

If approved and completed, the combined company is expected to list on Nasdaq under the ticker XRPN. Evernorth said it plans to hold and actively manage an XRP treasury as part of its strategy.