Key Focus This Week: 

“Federal Reserve Policy Signals, NVIDIA Earnings, and U.S.–Canada Economic Growth”

This week’s key themes in North American markets are relatively concentrated. Investors will focus primarily on the Federal Reserve Chair’s speech at Jackson Hole, the latest U.S. growth and inflation indicators, and whether NVIDIA’s earnings provide further validation of the artificial intelligence investment boom. In Canada, second-quarter GDP and labour demand data will be critical in assessing the sustainability of the economic recovery.

Federal Reserve Chair Kevin Warsh is scheduled to speak at the Jackson Hole Economic Policy Symposium on Friday. Minutes from the latest FOMC meeting showed that concerns over persistent inflation have increased among Fed officials. Markets will therefore closely monitor how Warsh assesses current inflation conditions, economic growth, and the future direction of interest rates. The Federal Reserve has officially confirmed the speech for August 28.

Before then, the United States will release its revised second-quarter GDP estimate and the latest Personal Income and Outlays report, including the Federal Reserve’s preferred PCE inflation indicators. Markets will use these figures to determine whether the U.S. economy remains resilient and whether inflationary pressures are strong enough to justify maintaining a restrictive monetary policy stance.

NVIDIA will report its latest quarterly results on Wednesday. As a key indicator of artificial intelligence infrastructure investment, the company’s data centre demand, chip supply conditions, and management’s outlook for future AI spending could influence the broader semiconductor and large-cap technology sectors. NVIDIA has officially confirmed that it will report results on August 26.

The recent increase in long-term bond yields has already placed pressure on highly valued technology stocks. As a result, markets will focus not only on whether AI demand continues to expand, but also on whether elevated capital expenditure can translate into sustainable profitability.

Statistics Canada will release second-quarter GDP and June monthly GDP data on Friday. Payroll employment and job vacancy figures are also scheduled for release this week. Markets will use these reports to assess whether the recent improvement in employment and consumer spending is translating into broader economic growth.

If economic activity continues to expand across a wider range of industries, it would support the view that the Canadian economy is gradually recovering. Conversely, if growth remains overly dependent on a limited number of sectors, concerns about future economic momentum may re-emerge.

Week’s Key Economic Data & News Recap

Federal Reserve Minutes Reveal Growing Inflation Concerns

Minutes from the July FOMC meeting showed that Federal Reserve officials had become increasingly concerned about inflation remaining above target, with some policymakers indicating that monetary policy might need to be tightened further. Divisions within the committee over the next policy move also became more apparent, leaving the direction of September’s decision open.

Canadian Inflation Accelerates Again

Canada’s headline inflation rate increased in July, primarily driven by higher energy and travel-related prices. However, the core inflation measures that better reflect broader price trends remained relatively stable, suggesting that inflationary pressures have not yet begun to accelerate across the economy.

Canadian Retail Spending Continues to Improve

Canadian retail sales continued to increase in June, with gains recorded across a broad range of categories. Core retail activity also remained positive, indicating that household consumption continues to demonstrate resilience despite the elevated cost of living and is providing support for domestic economic growth.

U.S. Consumers Become More Cautious

Earnings reports from major U.S. retailers showed that consumers have not broadly reduced their spending, but their purchasing behaviour has become more cautious. Consumers are placing greater emphasis on value and essential goods while reducing spending on large discretionary purchases and home-improvement products. This suggests that elevated energy prices and financing costs continue to affect household budgets.

Rising Bond Yields and Oil Prices Weigh on Global Equities

Global equity markets came under pressure last week as long-term U.S. Treasury yields continued to rise and geopolitical tensions in the Middle East kept energy prices elevated. Higher financing costs weighed particularly heavily on technology and semiconductor stocks, while gold benefited from stronger safe-haven demand and a weaker U.S. dollar.