Kevin Warsh faces his first major test at Jackson Hole
Inflation and interest rates will be the focus of the Fed Chair's first major speech, as markets look for signals on the direction of monetary policy.
Key points
France's GDP stagnates in Q2 2026
Eurozone economic sentiment rebounds in August on greater confidence
Tokyo inflation accelerates for the third consecutive month
Trump considers a new round of tariffs on semiconductors
For the rest of the day, the interbank exchange rate (Mexican pesos per U.S. dollar) could trade between 16.90 and 17.00 in the spot market
Investors are focused on Fed Chair Kevin Warsh's speech this morning at Jackson Hole, looking for signals on the path of interest rates following the Treasury's recent intervention in the bond market, with inflation still in focus. U.S. futures are trading mixed, while enthusiasm around AI has moderated following Nvidia's favorable outlook. The S&P 500 is up 0.10%, while the Nasdaq 100 is down by the same amount. Oil prices are pulling back following yesterday's rebound, with Brent crude down 0.7% at $89.10 per barrel, heading toward its first weekly decline in three weeks. Treasuries remain under selling pressure, with yields rising across the curve and the 10-year Treasury at 4.68%.
Monitor
Bolsas / Exchanges
S&P 500
7,750
0.10%
Nasdaq
29,658
-0.10%
Dow Jones
53,714
0.20%
IPyC
66,106
0.40%
Monedas / FX (Foreign Exchange)
USD/MXN
16.9527
-0.10%
EUR/MXN
19.7537
0.00%
EUR/USD
1.1648
0.00%
Índice DXY
99.22
0.10%
Tasas / Exchange Rates
Treasury 2 años
4.24
0.4 bp
Treasury 10 años
4.68
0.8 bp
TIIE 3 meses
6.58
2.0 bp
M Bono 10 años
9.18
-0.9 bp
Commodities / Commodity Markets
Petróleo (Brent)
89.10
-0.70%
Oro
4,599
-0.10%
What you need to know about the economy and markets
Kevin Warsh's speech today at Jackson Hole (8:00 a.m.) could be key in defining the Federal Reserve's tone ahead of upcoming meetings, although we do not expect explicit guidance on the path of interest rates, consistent with his preference for reducing forward guidance. Markets will therefore look for signals regarding his assessment of inflation, the strength of the economy, and the risks associated with elevated Treasury yields, amid inflation that remains above target and growing uncertainty over the interest rate outlook.
Our Take
The scenario is zero-sum for his credibility. A hawkish tone from Warsh could push Treasury yields higher and strengthen the dollar, while a more dovish message would benefit risk assets. The key will be his assessment of inflation and the room for rate cuts amid elevated public debt.
The French economy stagnated in Q2 2026, with 0.0% quarter-over-quarter growth, following the 0.2% contraction recorded in the first quarter and below the preliminary estimate of 0.2%. The result reflects an economy that remains weak, although with mixed signals: household consumption recovered 0.3% and exports rebounded 2.9%, while investment fell 0.3% and inventory reductions subtracted 0.7 percentage points from GDP.
Our Take
The revision to French GDP confirms a greater-than-expected loss of momentum, increasing risks to growth in the second half of the year. Although the rebound in consumption and exports provides some support, weak investment and deteriorating purchasing power, together with growing fiscal pressures, limit the scope for a sustained recovery.
The Eurozone Economic Sentiment Indicator (ESI) rebounded 1.3 points in August to 98.4, its highest level since January and above expectations. The improvement was broad-based across sectors, with greater optimism in industry, services, and retail trade, while consumer and construction confidence posted more modest gains.
Our Take
The result is an encouraging signal of the resilience of the European economy, particularly amid elevated geopolitical and energy uncertainty. Moreover, the indicator has improved for four consecutive months and is once again approaching its long-term average of 100, suggesting a gradual recovery in business and economic sentiment.
Tokyo's CPI accelerated to 1.9% year over year in August, its third consecutive monthly increase. Core inflation, which excludes fresh food, rose to 1.8%, slightly exceeding expectations and approaching the Bank of Japan's 2% target. In addition, inflation excluding fresh food and energy increased to 2.0%, from 1.8%, signaling that price pressures are becoming increasingly broad-based.
Our Take
These data, considered an early indicator of the national trend, strengthen the case for another BoJ rate hike, potentially as soon as September. The acceleration reflects higher food prices and greater pass-through of costs amid a weaker yen and higher import costs.
The Trump administration is considering launching a new round of tariffs on semiconductors, despite warnings from technology companies that the measure could undermine the United States' ambitions to dominate artificial intelligence. The measure would affect not only chips but potentially many products manufactured with them, such as laptops, video game consoles, and the servers powering data centers.
Our Take
The possibility of new tariffs on chips is alarming the U.S. technology industry, which is already facing a shortage of high-end semiconductors amid surging demand driven by the construction of AI data centers.
Corporate News
The Advent and Stripe consortium reportedly withdrew its intention to acquire PayPal, according to Bloomberg, marking a shift from negotiations that had gained momentum in recent weeks. The deal, which would have valued the fintech company at around $53 billion, faced disagreements over the price.
Gap shares are rising sharply after the company appointed Michael Francis as the new CEO of Old Navy, with the goal of reviving sales at its largest brand, which reported a 4% decline in comparable sales. At the same time, it raised its full-year earnings-per-share forecast to $2.35–$2.45, supported by improved margins.
Nvidia reportedly agreed to acquire Hugging Face for $12.9 billion, a transaction that would strengthen its position beyond hardware and allow it to expand its presence in the open-source AI model ecosystem.
The to-do list
Follow Kevin Warsh's speech live at the Jackson Hole symposium (8:00 a.m.) to assess the direction of Fed monetary policy.
Monitor the outcome of talks between Iran and Oman regarding the Strait of Hormuz ahead of the weekend.
Keep an eye on tensions between the United States and Canada. Yesterday, President Trump signed an executive order to rename Lake Ontario as Lake America.
Spend 20 minutes stretching or going for a walk. Ending the week by moving your body can make a difference heading into the weekend.
Today, August 28, Mexico celebrates National Senior Citizens Day, popularly known as Grandparents' Day.
Today's recommendation...
Azul Histórico on Isabel la Católica, Historic Center — one of the country's best Mexican cuisine restaurants. This weekend is the perfect time to try its chiles en nogada, a dish considered a masterpiece of seasonal Mexican gastronomy.
Alejandra Marcos amarcos@kapital.com
James Salazar jsalazars@kapital.com
Guillermo Quechol gquechol@kapital.com
Nahely Suasnavar nsuasnavara@kapital.com
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