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What changed last week
What happened, and how did it change the picture? Read the confirmed developments alongside the questions that remain open.
Energy Risk, AI Investment, and a Split in Central-Bank Pace
Strait of Hormuz supply risk remained a common inflation constraint, while resilient US private demand and AI investment supported growth expectations and central banks responded to the same uncertainty at different speeds.
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- Futures Compass
The week at a glance
During August 23 through 29, hopes for a Strait of Hormuz agreement repeatedly ran into reports of stalled talks and fresh attacks. At the same time, US data combined slower headline growth, resilient private demand, and elevated inflation. Energy supply risk remained the thread connecting policy judgments in the United States, Europe, and South Korea.
A major AI chipmaker's results confirmed the strength of investment demand, but Jackson Hole and central-bank releases offered no predetermined path from AI spending to productivity or interest rates. This review includes the Jackson Hole keynote delivered late on August 28 KST and excludes the final sessions that continued into August 30 KST.
Week in review · Topics and sources
Hormuz Diplomacy Did Not Remove the Physical Supply Risk
Talks about reopening the strait supported hopes of relief, but a tanker attack and still-depressed vessel traffic showed that the risk had not cleared.
Verified facts
- 01
The Associated Press reported on August 27 that Qatar's prime minister had traveled to Tehran and that Iran and Oman were discussing a framework for safe passage. The same report cited a tanker strike reported to UKMTO and traffic that remained below prewar levels. [1]
- 02
Reuters reported the same day that earlier market hopes for an agreement weakened after the United States said it was not in direct talks with Iran. Kpler data showed vessel transits had risen from a recent low but remained constrained. [2]
- 03
The US Energy Information Administration published petroleum data for the week ended August 21 on August 26. A later correction said distillate stocks had fallen by 2.2 million barrels, not risen, and that the underlying data table had been correct from the outset. [3][4]
- Diplomatic progress could reduce the supply-disruption premium, but restricted traffic and repeated attacks showed that the physical risk remained. Energy prices were the common variable linking inflation and monetary policy across the United States, Europe, and South Korea during the week.
- Responsibility for the attacks was not confirmed, and the Associated Press said it could not independently verify the US military's statement that mines had been cleared from the international shipping lane. Sustained improvement in traffic and fewer attacks would weaken this reading; failed talks or further attacks would reinforce it.
What to watch next
- Official UKMTO incident and transit notices
- Whether the recovery in Hormuz traffic persists for several weeks
- EIA crude and refined-product inventories, including correction notices
Related markets
US Private Demand Was Firmer Than the GDP Headline
Second-quarter GDP grew at a 1.5% annual rate, but private domestic final demand rose 4.2% and July PCE inflation remained well above target.
Verified facts
- 01
In its second estimate, the Bureau of Economic Analysis said US real GDP increased at a 1.5% annual rate in the second quarter, unchanged from the advance estimate. Real final sales to private domestic purchasers rose 4.2%. The PCE price index increased at a 5.3% annual rate in the quarter, and the index excluding food and energy rose 3.6%. [5]
- 02
The PCE price index rose 3.7% from a year earlier in July, while the index excluding food and energy rose 3.3%. Real personal consumption expenditures increased by less than 0.1% from June. [6]
- 03
The Bureau of Labor Statistics' preliminary March benchmark revision was a reduction of 79,000, or 0.1%, for total nonfarm employment and 178,000, or 0.1%, for private employment. The average absolute revision over the past ten years was 0.2%, and the preliminary figures will not enter the official monthly series before the final revision in February 2027. [7]
- The 1.5% GDP headline did not by itself describe weak domestic demand. Private final demand was strong, but monthly real consumption was nearly flat and inflation was high. The preliminary payroll benchmark was closer to evidence of the limits of early estimates than to evidence of a sudden labor-market collapse.
- The Bureau of Economic Analysis is scheduled to revise GDP and PCE again with its annual update on September 30. The payroll benchmark is also preliminary: it should not be divided into monthly job estimates or described as a confirmed employment loss.
What to watch next
- The August US employment report on September 4
- The BEA annual update and August PCE release on September 30
- Whether private final demand and real consumption begin to move together
Related markets
Strong AI Investment Met a Conditional Signal from Jackson Hole
A leading AI chipmaker confirmed vigorous investment demand, but Jackson Hole did not settle the productivity payoff or the path of interest rates.
Verified facts
- 01
NVIDIA reported on August 26 that revenue for its second quarter of fiscal 2027 reached $96.2 billion, up 106% from a year earlier, while data-center revenue rose 117% to $89.0 billion. The Associated Press separately reported on the results and demand for AI infrastructure. [8][9]
- 02
The Federal Reserve Bank of Kansas City set the theme of its 2026 Jackson Hole symposium around the effects of financial innovation on payments and policy. [10]
- 03
Federal Reserve Chair Kevin Warsh said in his August 28 speech that AI could become a new factor of production, while emphasizing that the size and timing of productivity gains and who would capture them remained unknown. He also said the findings of the related task force would not affect current policy decisions. [11]
- 04
In the same speech, Warsh called for less routine forward guidance, affirmed the 2% PCE inflation target, and emphasized the immediate inflation problem without signaling a specific rate decision. [11]
- 05
This review's Jackson Hole record ends with the keynote that began at 11:00 p.m. KST on August 28. The final sessions on the August 29 Mountain Daylight Time schedule continued into August 30 KST and are not included here. [10]
- The company results were direct evidence that AI infrastructure spending was reaching one firm's revenue. They were not evidence that economy-wide productivity or a particular rate path had already followed. Jackson Hole pointed more toward a conditional, data-dependent decision process than toward a predetermined direction for rates.
- One company's rapid growth cannot represent productivity or investment returns across the economy. The Fed chair's view is also not a collective FOMC decision, and supply constraints, higher investment costs, or weaker cash flow at downstream firms could change the interpretation.
What to watch next
- Capital spending and cash flow at major cloud providers
- Whether wider AI adoption becomes visible in productivity and employment
- The next jobs and inflation reports and the FOMC's collective assessment
Related markets
The Bank of Korea and ECB Moved at Different Speeds
The Bank of Korea raised its policy rate, while the ECB had waited at its previous meeting. Domestic conditions produced different responses to the same energy shock.
Verified facts
- 01
The Bank of Korea raised its base rate by 0.25 percentage point, from 2.75% to 3.00%, on August 27, citing stronger-than-expected growth, an above-target inflation outlook, and financial-stability risks. [12]
- 02
The Bank of Korea projected growth of 3.3% in 2026 and 2.9% in 2027. It identified oil prices, the exchange rate, domestic demand, and wages as macroeconomic uncertainties, while flagging housing prices in the Seoul metropolitan area and household lending as financial-stability concerns. [12]
- 03
The ECB account of its July 22–23 meeting, published on August 27, said all members had agreed to leave the three key rates unchanged after the June increase. Members left open the possibility of another increase if the inflation outlook did not improve enough, but did not commit to a September move. [13]
- Both central banks faced an energy shock and elevated inflation, but their responses diverged. The Bank of Korea also weighed strong domestic growth and financial-stability risks and chose to raise rates. The ECB opted to gather more evidence on the persistence and second-round effects of the supply shock. Interest-rate differentials and currencies could therefore respond more to domestic transmission than to a shared global headline.
- The ECB release was a retrospective account of its July meeting, not an August policy decision. Further tightening by the Bank of Korea and the ECB's next move both remain conditional on subsequent energy, inflation, and growth data, so neither should be treated as a preset sequence of rate increases.
What to watch next
- South Korean inflation, housing, household lending, and USD/KRW
- The ECB's September projections and second-round energy-price effects
- Divergence in policy-rate expectations across the United States, Europe, and South Korea
Related markets
Sources and evidence
Follow a source number in the text to its reference below. Primary documents and independent reporting let you check the facts for yourself.
- [1]Associated Press · Hormuz Diplomacy and Tanker Strike
Qatari diplomacy, a safe-passage proposal, a tanker strike, and constrained traffic
- [2]Reuters · Stalled Hormuz Talks and Energy Markets
The market response after the United States denied direct talks and the limits on vessel traffic
- [3]US Energy Information Administration · August 26 Weekly Petroleum Report
Crude and refined-product inventories for the week ended August 21
- [4]US Energy Information Administration · Weekly Petroleum Report Correction
Correction to the stated direction of the distillate-stock change and confirmation that the data table was accurate
- [5]US Bureau of Economic Analysis · Second Estimate of Q2 2026 GDP
Real GDP, private domestic final demand, and quarterly PCE inflation
- [6]US Bureau of Economic Analysis · July 2026 Personal Income and Outlays
Monthly real consumption and headline and core PCE inflation
- [7]US Bureau of Labor Statistics · Preliminary March 2026 Payroll Benchmark
Preliminary nonfarm and private payroll revisions and when they enter the official series
- [8]NVIDIA Investor Relations · Second-Quarter Fiscal 2027 Results
Company-reported revenue and data-center revenue
- [9]Associated Press · AI Chipmaker Earnings
Independent reporting on company results and AI-infrastructure demand
- [10]Federal Reserve Bank of Kansas City · 2026 Jackson Hole Symposium
The symposium theme, Mountain Daylight Time schedule, and presentation materials
- [11]Federal Reserve · Kevin Warsh at Jackson Hole
Uncertainty around AI productivity, forward guidance, the inflation target, and current policy
- [12]Bank of Korea · August 2026 Monetary Policy Decision
The base-rate increase, growth and inflation projections, and financial-stability assessment
- [13]European Central Bank · Account of the July 2026 Monetary Policy Meeting
The July hold, energy-driven inflation risk, and conditions for the next decision