S&P 500 +0.41% to 6,465.94 US curve steepens: 2Y/30Y spread highest since January 2022 at 122.7 bpsGold +0.75% to $3,393.30 an ounceDXY -0.21% to 98.22What to look out for today
Companies reporting on Wednesday, 27th August: Nvidia, CrowdStrike, HP, Snowflake, Agilent Technologies.
Key data to move markets today
EU: GfK Consumer Confidence Survey.
US Stock Indices
Dow Jones Industrial Average +0.30%.
Nasdaq 100 +0.43%.
S&P 500 +0.41%, with 7 of the 11 sectors of the S&P 500 up.
Major US stock indices saw gains on Tuesday, with the S&P 500 and the Nasdaq each advancing by +0.41% and +0.43%, respectively. The Dow Jones Industrial Average rose +0.30%. Market participants are now anticipating the release of Nvidia's earnings report today after market close. As the world's most valuable listed company, Nvidia's results are expected to have a significant impact on the AI trade.
In corporate news, the US Justice Department's criminal division is reportedly investigating UnitedHealth Group's prescription management services and its reimbursement practices for its physicians. According to Bloomberg news, the probe is part of an ongoing examination into the company's operations.
Apple has scheduled its major autumn product launch for 9 September, when it is expected to unveil the iPhone 17 lineup, including a new, slimmer model.
EchoStar has reached an agreement to sell spectrum licences to AT&T for approximately $23 billion. This transaction is anticipated to help EchoStar avoid bankruptcy and address regulatory concerns regarding its use of airwaves.
Kroger is implementing a cost-cutting measure by laying off nearly 1,000 corporate employees. This decision follows the termination of its proposed merger with Albertsons.
S&P 500 Best performing sector
Industrials +1.03%, with GE Vernova +3.92%, Boeing +3.51%, and General Electric +2.75%.
S&P 500 Worst performing sector
Consumer Staples -0.46%, with Keurig Dr Pepper- 6.91%, Brown-Forman -3.83%, and Bunge Global -3.65%.
Mega Caps
Alphabet -0.58%, Amazon +0.34%, Apple +0.95%, Meta Platforms +0.11%, Microsoft -0.44%, Nvidia +1.08%, and Tesla +1.46%.
Information Technology
Best performer: Palantir Technologies +2.35%.
Worst performer: Adobe -2.29%.
Materials and Mining
Best performer: Martin Marietta Materials +2.07%.
Worst performer: Avery Dennison -1.45%.
European Stock Indices
CAC 40 -1.70%.
DAX -0.50%.
FTSE 100 -0.60%.
As of 26th August, according to LSEG I/B/E/S data, for the STOXX 600, Q2 2025 earnings are expected to increase 4.3% from Q2 2024. Excluding the Energy sector, earnings are expected to increase 8.2%. Q2 2025 revenue is expected to decrease 1.5% from Q2 2024. Excluding the Energy sector, revenues are expected to increase 0.6%. Of the 274 companies in the STOXX 600 that have reported earnings by 26th August for Q2 2025, 52.9% reported results exceeding analyst estimates. In a typical quarter 54% beat analyst EPS estimates. Of the 346 companies in the STOXX 600 that have reported revenue for Q2 2025, 48.9% reported revenue exceeding analyst estimates. In a typical quarter 58% beat analyst revenue estimates.
Financials is the sector with most companies reporting above estimates at 71%. Financials, with a surprise factor of 12.2%, is the sector that beat earnings expectations by the highest surprise factor. In the Basic Materials sector, 73% of companies have reported below estimates. Its earnings surprise factor was the lowest at -13.1%. The STOXX 600 surprise factor is 5.6%, which is below the long-term (since 2012) average surprise factor of 5.8%. The forward four-quarter price-to-earnings ratio (P/E) for the STOXX 600 sits at 14.6x, above the 10-year average of 14.2x.
During the week of 1st September, 3 companies are scheduled to report Q2 earnings.
Corporate Earnings Reports
Posted on Tuesday, 26th August
MongoDB quarterly revenue +23.6% to $591 mn vs. $554 mn estimate.
Loss Per Share at -$0.58 vs. $0.67 estimate.
Dev Ittycheria, President and CEO, said, “MongoDB delivered strong second quarter results across the board, highlighted by Atlas revenue growth accelerating to 29% and adding over 5,000 customers year-to-date, the highest ever in the first half of the year. We also delivered meaningful margin outperformance as we executed on our plan to drive profitable growth. Reflecting this strength, we are raising our guidance on the top and bottom line for the rest of the year. These results reflect the strength of MongoDB's platform – our flexible document model, expanded database capabilities like search and vector search, enterprise-grade security, durability, availability, performance, and the ability to run anywhere. Many of our recently added customers are building AI applications, underscoring how our value proposition is resonating in the AI era and why MongoDB is emerging as a key component of the AI infrastructure stack.” — see report.
Commodities
Gold spot +0.75% to $3,393.30 an ounce.
Silver spot +0.10% to $38.59 an ounce.
West Texas Intermediate -2.19% to $63.31 a barrel.
Brent crude -2.17% to $67.27 a barrel.
Gold prices reached a two-week high on Tuesday, driven by safe-haven demand over concerns around Fed independence.
Spot gold increased +0.75%, reaching $3,393.30 per ounce, its highest level since 11th August. This rise reflected investor apprehension after President Trump announced his firing of Fed Governor Lisa Cook. The stated reason for her dismissal was alleged improprieties related to obtaining mortgage loans. This action, likely to be challenged in court, is an unprecedented step that could potentially test the limits of presidential authority over the independent monetary policy body.
Moving forward, investors are now focussing on key economic data releases, including the US GDP report on Thursday and the Personal Consumption Expenditures (PCE) index on Friday.
On Tuesday, oil prices dropped by more than two percent, reversing gains from the previous session. This decline occurred as investors monitored a series of global developments, including ongoing concerns about US tariffs, the conflict in Ukraine, and potential disruptions to Russian fuel supplies.
Brent crude fell by $1.49, or -2.17%, to settle at $67.27 a barrel, a day after reaching its highest price since early August. Similarly, WTI crude fell $1.42, or -2.19%, to settle at $63.31.
The significant uncertainties in the oil market, driven by the Ukrainian conflict and the tariff dispute, have made investors hesitant to commit to any long-term directional positions.
In response to Russia's military actions, Ukrainian attacks have targeted Russian oil processing and power facilities, disrupting Moscow's oil refining and export capabilities and causing gasoline shortages in some parts of Russia. This has led Russia to increase its crude oil export plan from western ports by 200,000 barrels per day for August, shifting crude previously allocated for domestic refining to international shipment.
The US President renewed threats to impose sanctions on Russia if no progress is made toward a peace agreement within the next two weeks. Additionally, Indian exports are facing the possibility of US duties of up to 50%. These would be among the highest tariffs imposed by Washington.
Note: As of 5 pm EDT 26 August 2025
Currencies
EUR +0.22% to $1.1644.
GBP +0.13% to $1.3471.
Bitcoin +1.15% to $111,191.50.
Ethereum +5.05% to $4,572.85.
The US dollar declined against major currencies on Tuesday largely due to renewed concerns over the Fed's independence following the US President's unprecedented attempt to dismiss Fed Governor Lisa Cook. The dollar index was down -0.21% at 98.22.
The euro gained +0.22% against the dollar, reaching $1.1644, while the British pound rose +0.13% to $1.3471. The dollar also weakened against the Japanese yen, falling -0.24% to ¥147.33.
Fixed Income
US 10-year Treasury -1.7 basis points to 4.259%.
German 10-year bund -3.4 basis points to 2.730%.
UK 10-year gilt +4.8 basis points to 4.745%.
The US Treasury yield curve steepened on Tuesday, with shorter-dated yields declining more significantly than their longer-dated counterparts. The gap between long and short-term yields climbed to its widest in three years during the day.
This shift was influenced by concerns that a politically-pressured Fed might keep interest rates artificially low. Such a scenario could heighten concerns about rising inflation and diminish foreign demand for US debt. These factors would exert pressure on longer-dated debt.
The 2-year note yield, which often reflects interest rate expectations, was down -5.1 bps on the day, settling at 3.683%. In contrast, the yield on 10-year notes fell by -1.7 bps to 4.259%. The spread between the 2-year and 10-year notes widened to 57.6 bps, having earlier reached 59.8 basis points, its steepest level since 16th July.
Richmond Fed President Tom Barkin stated his forecast anticipates a modest adjustment in interest rates, as he foresees little change in economic activity for the rest of the year.
On the supply front, the Treasury Department's $69 billion sale of two-year notes on Tuesday saw strong demand. This was the first of three auctions this week, totalling $183 billion in short- and intermediate-dated supply. The notes sold at a high yield of 3.641%, which was 1.5 bps below the pre-auction trading level. The bid-to-cover ratio was 2.69x, the best ratio recorded since December.
The government is also scheduled to auction $70 billion in five-year notes on Wednesday and $44 billion in seven-year notes on Thursday.
Fed funds futures traders are now pricing in a 89.3% probability of a rate cut in September, up from 86.6% last week, according to CME Group's FedWatch Tool. Traders are currently anticipating 54.3 bps of cuts by year-end, slightly lower than the 54.5 bps expected last week.
Across the Atlantic, political instability in France has led to shifts in European bond markets, with France's 10-year yield reaching its highest point since March.
Prime Minister Francois Bayrou now appears likely to lose the 8th September confidence vote, which centres on his plans for significant budget cuts. Bayrou has urged lawmakers to choose between ‘chaos’ and ‘responsibility,’ calling on the public to pressure their representatives to make a ‘prudent choice.’
The prospect of renewed political turmoil in France exacerbated broader concerns in global bond markets about Fed independence.
Germany's bonds experienced a flight to safety, with the 10-year yield falling by -3.4 bps to 2.730%. Yields across the maturity spectrum also declined: the 2-year yield dropped by -2.8 bps to 1.948%, and the 30-year yield decreased by -1.4 bps to 3.320%.
France's 10-year bond yield peaked at 3.530% in early trading, a level not seen since March. It closed the day +0.6 bps higher at 3.501%. The spread between French and German 10-year yields widened to over 79 bps at one point—its highest since April—before settling at 77.1 bps.
The spread between French and Italian 10-year yields, in contrast, narrowed to 5.9 bps, down from more than 150 bps just two years ago. Italy's 10-year yield fell -2.3 bps to 3.560%.
Note: As of 5 pm EDT 26 August 2025
Global Macro Updates
Trump’s firing attempts at the Fed. The President's attempted dismissal of Governor Cook could have profound implications for the Fed’s independence and composition. If successful, it would allow the President to nominate another member to the Fed's Board of Governors, potentially creating a four-person majority of presidential appointees.
Control of the Fed would offer a president more than just influence over interest rates. The central bank's vast and virtually unlimited balance sheet could be used to enact de facto fiscal policy, allowing a president to bypass congressional approval.
Market reactions have been relatively subdued, with the most notable movements occurring in the Treasury market. Short-term yields have fallen due to expectations of future rate cuts. Conversely, long-term yields have risen as investors begin to factor in a potential loss of the central bank's independence.
It's also important to note that while Chair Powell may have signalled the possibility of rate cuts at the Jackson Hole symposium, a consensus among other Fed presidents has not been established. Several of them, including Kansas City Fed President Jeff Schmid, Chicago Fed President Austan Goolsbee, and Richmond Fed President Tom Barkin, have voiced concerns about persistent inflation and expressed confidence in the state of the labour market.
The Fed's ability to control inflation is directly tied to its credibility. If the public perceives that political pressure will prevent the central bank from tightening monetary policy, it could lead to higher inflation expectations. Ultimately, the core issue is a shift in the Fed's accountability from Congress to the executive branch, a risk of an executive power grab from the legislative one. This would significantly increase the risk of fiscal dominance.
BoE’s Mann strikes a hawkish tone in Mexico City. In an address on Tuesday, in Mexico City, Catherine Mann, a member of the BoE's rate-setting committee, articulated her view that borrowing costs should be maintained at their current levels for an extended period.
Her comments highlighted the BoE's ongoing concerns about persistent inflation. Speaking at an event marking the 100th anniversary of Banxico, Mexico's central bank, Mann stated that ‘a more persistent hold on Bank Rate is appropriate right now.’ She justified this stance by asserting that her primary forecast anticipates elevated price pressures to continue.
Mann contended that monetary policy was ‘not tight enough’ to curb inflation, particularly when considering the market's expectation, as outlined in the BoE's 7th August forecast, of two additional rate cuts in the latter half of the following year. Her remarks followed a narrowly decided rate cut earlier in the month. UK headline inflation had reached an 18-month high of 3.8% in July, driven by rising costs for food, transportation, and hospitality.
More specifically Mann said, ‘A more persistent hold on Bank Rate is appropriate right now, to maintain the tight (but not tighter) monetary policy stance needed to lean against inflation persistence persisting.’ She did, however, add a caveat, stating, ‘However, I stand ready for a forceful policy action, in the form of larger, more rapid Bank Rate cuts, should the downside risks to domestic demand start materialising.’ Mann pointed to rising household inflation expectations and the surge in grocery prices as key drivers of behaviour, particularly wage demands.
She cited research suggesting that UK households and businesses become more attentive to inflation once it reaches a threshold of 3.0% to 3.6%. The speech also reiterated her previously expressed preference for an activist approach to monetary policy, which favours more significant adjustments once clear evidence emerges.
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