Global Highlights for This Week: Fed Minutes in Focus

Last week, the three major U.S. stock indexes turned in a mixed performance: the Dow slipped 0.56%, while the S&P 500 gained 0.36% and the Nasdaq Composite added 0.14%.

U.S. equities are currently supported primarily by strong corporate earnings, propelled in part by AI infrastructure spending. Looking ahead to this week, investors once again confront a familiar slate of worries: central bank policy, inflation, and geopolitical tensions.

With Federal Reserve officials offering little fresh forward guidance, uncertainty surrounding the central bank's next move is on the rise. On Wednesday (early Thursday Beijing time), the Fed will release the minutes of its latest Federal Open Market Committee (FOMC) policy meeting.

At its July 29 meeting, the Fed held rates steady for a fifth consecutive time, keeping the target range for the federal funds rate at 3.5% to 3.75%. However, three members dissented in favor of a 25-basis-point hike.

Market expectations for a Fed rate hike cooled following relatively mild inflation data released last week.

Yet the internal standoff between hawks and doves continues to escalate: while dovish officials find firmer footing in recent data, select hawks maintain a steadfast stance.

Unresolved Middle East Conflict Keeps Markets on Inflation Alert

Investors remain vigilant for any signs of reaccelerating U.S. inflation.

Persistently high energy costs, coupled with stalled U.S.-Iran negotiations, have stoked concerns over potential oil price spikes that could push consumer prices and bond yields higher.

During Friday's session, Donald Trump said in an interview that the U.S. would hit Iran hard economically, adding that he would "soon declare the Strait of Hormuz American territory."

Trump also remarked that high oil prices are a minor concern compared to preventing Iran from acquiring nuclear weapons, adding that he "will never apologize. I did the right thing."

International crude benchmarks rebounded noticeably last week, with WTI crude advancing nearly 6% and Brent crude climbing about 7%.

A day earlier, Iranian Foreign Minister Abbas Araghchi told media that Tehran has made no decision on resuming talks with the U.S., emphasizing that Iran will restore passage through the Strait of Hormuz only if Washington meets certain conditions.

Looking ahead to this week, results from retail giants including Home Depot, Lowe's, and Target will be in focus. Sitting at the end of the supply chain, big-box retailers often have immediate insight into whether inflationary pressures are quickening or easing.

For now, robust corporate earnings have helped keep market volatility in check. According to LSEG data, roughly 85% of S&P 500 companies that have reported results beat earnings expectations.

"So far, we've not only seen beats on both top and bottom lines, but also a significant number of companies raising guidance with relatively few lowering it," said Andy Pratt, Head of Investment Strategy at Burney Company. "Corporate America is effectively telling us that 'the party is still on.'"

Key Global Economic Events This Week

Monday (Aug 17): South Korean equity markets closed; U.S. Empire State Manufacturing Index (Aug); U.S. NAHB Housing Market Index (Aug)
Tuesday (Aug 18): Eurozone ZEW Economic Sentiment Index (Aug); U.S. Housing Starts (Annualized, Jul); U.S. Import/Export Price Indexes (MoM, Jul); U.S. Industrial Production (MoM, Jul); U.S. Pending Home Sales (MoM, Jul)
Wednesday (Aug 19): U.K. CPI (MoM, Jul); ECB President Christine Lagarde speaks at panel discussion; Eurozone CPI Final (YoY, Jul); U.S. EIA Crude Oil Inventories (Week ended Aug 14)
Thursday (Aug 20): Federal Reserve releases FOMC Meeting Minutes; U.S. Initial Jobless Claims (Week ended Aug 15); U.S. Philadelphia Fed Manufacturing Index (Aug); U.S. Conference Board Leading Economic Index (MoM, Jul)
Friday (Aug 21): Japan Core CPI (YoY, Jul); Eurozone S&P Global Manufacturing / Services / Composite Flash PMIs (Aug); U.S. S&P Global Manufacturing / Services / Composite Flash PMIs (Aug); Eurozone Consumer Confidence Flash (Aug)