The Market Brief

U.S. stock index futures held steady after a solid week of gains, as investors looked ahead to upcoming economic reports for clues on the Federal Reserve’s policy decision next month.

Impact Snapshot

• 🟥 PPI Inflation - 8:30am

• 🟥 Unemployment Claims - 8:30am

Macro Viewpoint

Focus yesterday remained on the US CPI print and implications for a dovish Fed, with markets now pricing in over 25bps of cuts for the September meeting.

This week’s focus is on economic report numbers as investors rush to assess what type of implications the tariffs have had on hard and soft data.

Regardless of precisely how much tariffs move this year, the overall conclusion is that they are increasing materially relative to 2024. In isolation, that should create at least a short-run drag on GDP and a boost to inflation, as well as having other economic effects.

When we factor in the recent passage of the government reconciliation budget bill, however, the overall primary budget deficit is likely to remain quite stable over 2024–26, which should limit the hit to GDP, especially as we get into next year.

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