Daily Brief | August 20 2025

Top News

·     Later today, the Federal Reserve minutes could reveal whether the stance in favor of cutting rates in the short term is gaining broader internal support, in a context of growing tension between labor market risks and inflationary pressures.

·     U.S. Treasury Secretary Scott Bessent praised the current agreement with China, describing it as “very good” and a sign of the desire to maintain calm in the relationship ahead of the next meeting.

·     The annual inflation rate in the United Kingdom accelerated to 3.8% in July 2025, its highest level since January 2024, up from 3.6% in June and above market expectations of 3.7%.

·     The People’s Bank of China kept its 1-year and 5-year benchmark lending rates unchanged, prioritizing targeted structural measures over broad monetary easing in the face of signs of a slowdown in the world’s second-largest economy.

Economic Outlook

Later today, the Federal Reserve minutes could reveal whether the stance in favor of cutting rates in the short term is gaining broader internal support, in a context of mounting tension between labor market risks and inflationary pressures. In its most recent monetary policy meeting, the Fed kept rates unchanged, although two of its governors — Michelle Bowman and Christopher Waller — dissented by advocating for an immediate cut to cushion the incipient weakness in the labor market. These concerns were quickly validated by Labor Department data showing a sharp downward revision to May and June employment and a rise in the unemployment rate, which fueled bets on a September rate cut. However, the resurgence of inflationary pressures stemming from the Trump administration’s tariff policy has kept resistance alive within the Committee, reinforced by the recent acceleration of both core inflation and producer prices. Ahead of the minutes release, the market is assigning an 85% probability to a 25bp cut next month, though the true barometer will be Jerome Powell’s speech at Jackson Hole, where he will have to balance the urgency of protecting the labor market against the risk of anchoring inflation expectations above the 2% target, all within a politically charged environment marked by President Trump’s criticism and his push to eventually replace the Fed Chair.

Markets and Stocks

U.S. equity futures traded slightly higher this morning as investors awaited the release of the Federal Reserve minutes and Jerome Powell’s speech at Jackson Hole. The market continues to anticipate a rate cut in September. In Europe, major indices traded mixed, with the defense sector extending losses amid renewed expectations of a ceasefire in Ukraine. In Asia, Japan and South Korea posted declines following news of the sharpest drop in Japanese exports in more than four years, while China and Hong Kong advanced on stimulus expectations and the decision to keep benchmark lending rates unchanged.

In commodities, oil prices climbed, supported by a drop in U.S. inventories and the impact on a BP refinery in Indiana. Gold, meanwhile, rebounded to 3,342 dollars per ounce.

In fixed income, the U.S. 10-year Treasury yield stood at 4.30%, while the 2-year yield traded at 3.74%, both steady ahead of the FOMC minutes release.

Corporate News

– Target shares fell around 10% after reporting declines in sales and traffic, despite exceeding expectations on revenue and earnings. In addition, the company appointed Michael Fiddelke as its next CEO effective February 1, 2026, replacing Brian Cornell. Finally, Target announced the end of its partnership with Ulta Beauty in 2026, reflecting its challenges in regaining momentum in key categories.

– Shares of cosmetics company Estée Lauder dropped 8% after warning of a $100 million tariff impact in 2026 and guiding earnings below estimates.

– Intel continued its rally following news that the U.S. government and SoftBank could take stakes in the company. However, its valuation has soared to levels comparable to the dot-com bubble, in a context of relatively weaker profits: from generating more than $20 billion in annual earnings between 2018 and 2021 to projecting $1.1 billion over the next four quarters, raising concerns among some investors.