ADVANCED ECONOMIES
EUROZONE
Inflation strength seals ECB rate hike. Headline CPI inflation jumped to 3.3% in August (+0.5 pp m/m) on the back of a surge in energy prices. Industrial goods inflation (ex-energy) is firming, albeit from a low level (1.2% y/y). However, services (3% y/y) and food (1.2% y/y) inflation are softening. That said, non-energy producer prices are picking up. The overall PPI (excluding construction) jumped 1% m/m and rebounded by 5.8% y/y. The core PPI (excluding construction and energy) rose 3.1 % y/y, and the 3m/3m annualised rate jumped to 7%, the highest since November 2022, driven by intermediate goods prices (+6.3 % y/y). Retail sales slipped by 0.6% m/m in July, pulled down by German data. The unemployment rate held steady at 6.4%, with the Spanish jobless rate falling back to 10% for the first time since 2008. Upcoming: ECB meeting (Thursday); third GDP estimate for Q2 (Monday).
France
Mixed news keeps OATs under pressure
The August manufacturing PMI was revised up to 51.1 (vs flash: 50.7; July: 48.5) but the composite index was driven further down to 48.5 (flash 48.8; July: 49.4) by a lower reading on services (48; flash: 48.4; July: 49.6), where activity has been contracting for 8 consecutive months. More positively, passenger car sales increased in August by 7.5% y/y (+3% YTD), with EVs reaching 38% of the total. Moreover, the fiscal deficit improved slightly in July. Still, the OAT yield edged up driven by Germany (with spread hovering near multi-year highs at 86/87). Upcoming: Insee GDP forecast update (Friday).
Germany
Contained inflation acceleration despite solid August activity data. HICP inflation accelerated to 2.9% y/y in August (2.8% in July), below the consensus forecast (3.1%). Core inflation was stable at 2.6%. August PMIs were revised upward from already strong flash prints: Composite: 51.8 (vs 51.0 flash and 51.3 in July) Manufacturing: 54.3 (vs 54.1 flash and 52.2 in July), a stronger improvement than expected, with robust growth in new orders driving production to its highest level since early 2022, driven by the intermediate goods sector. Industrial job losses are declining at a slower rate than last month, suggesting that the situation is stabilising after three years of workforce reductions. Services only improved to 49.7 (vs 48.5 flash and 49.8 in July). Furthermore, new car registrations grew by +2.6% y/y and +4.8% YTD. BEVs (battery electric vehicles) recorded the strongest growth (+75.1%), while gasoline registrations plunged (-37.9%). In July, retail sales unexpectedly fell, while factory orders surged, growing +13% YTD. However, industrial production fell in July for the first time since March 2026 (-1.1% m/m after +0% in June), driven by a sharp decline in manufacturing (-2.3% and the lowest level since May 2020), particularly in automotive production (-8.3% m/m). According to the economic institute IW, FDI into Germany grew by 50% y/y in 2025, driven by a whopping 284% increase in FDI from the UK, which more than offset the 44% decline in FDI from the US.
Italy
Inflation accelerates as services sector outperforms the rest of Europe. August headline inflation accelerated to 3.2% (2.9% in July) but core edged down to 1.7% (vs 1.8% in July). The services PMI rose to 55.2 in August from 52.5 in July — the highest reading since April 2023 and a third consecutive month of expansion. New business rose to 55.6. The composite PMI climbed to 53.6 from 52.5. Manufacturing PMI was weaker: 49.6 (-1.7 m/m; lowest since January 2026). Weak domestic demand has led to a fall in new orders to their lowest level since March 2025. Nevertheless, businesses remain confident about the future and are stepping up recruitment (+1.7 m/m; highest level since April). On the price front, both input and final output prices are falling.
Spain. Strong inflation surprise and services activity. Headline CPI inflation accelerated to 4.5% in August (3.9% in July), while core slowed to a still robust 3.5% (3.7% in July). PMIs showed activity expanding at a slower pace overall (composite at 55.8, -0.8 m/m), with services remaining strong (at 57.8, -0.5 m/m) and manufacturing falling into contraction (to 49.5, -0.7 m/m and its lowest level since March 2026).
UNITED STATES
Bullish data increase odds of Fed September hike. August payrolls blew past all estimates with 162,000 jobs added in August. The unemployment rate held steady at 4.1%. June and July's weak job creations were revised up by 55,000. Average hourly earnings rose 0.3% month-on-month, in line with estimates. President Trump reacted to the “great jobs number” by explicitly calling the “Fed Board, with its great new leader” to lower the policy rate. Meanwhile, ISM surveys held firmly in expansion territory in August. The manufacturing index eased to 54.6 (down 1.0pp) but has expanded in every month of 2026 so far after contracting in 36 months out of 38; non-manufacturing improved to 55.4 (up 1.3pp). Supply pressures, however, remained acute (measured by prices-paid gauges and supplier delivery times). The US trade deficit widened 24.4% to $88.6 billion in July — the largest since early 2025 — driven by an 11.4% surge in capital goods imports (computers and semiconductors). Exports fell 2.1%. Based on Fed chair Warsh’s hawkish framing in Jackson Hole and other more dovish FOMC members’ comments since, markets are now pricing a 60% probability of hike. Next week’s CPI print will be key.
Trust issues? Neither institution framed it as such, but this week saw a decision by the Dutch Central bank to remove a chunk of its gold holdings from New York (following a similar move by the Bank of France completed in March), while Norway’s sovereign wealth fund offered the government to reduce by 12% the weight of US Treasuries in its asset allocation (in favor of other US fixed income assets). If approved, this would lead to a $80 bn reduction in its holdings of Treasuries. Upcoming: August PPI and Existing Home Sales (Thursday); August CPI Inflation (Friday).
JAPAN
Hawkish BOJ, a firmer yen, and higher JGB yields. Increasingly pressured by high inflation, weakening FX and, as of this week, the US Secretary of the Treasury, the Bank of Japan multiplied signals that it was set to accelerate the pace of normalisation, with a September hike being now the base case. The yen had its best week since July, appreciating sharply to USDJPY 156, from above 160 a week earlier. This move reflects reports about a possible further intervention and growing confidence about an imminent BoJ rate hike. The 10-year JGB yield rose above 3% on a combination of external (global bond sell-off) and domestic (prospect of an expansionary FY2027 budget implying additional issuance) factors, before retreating somewhat.
EMERGING ECONOMIES
EUROPE, MIDDLE EAST & AFRICA
Central Europe: Continued expansion in manufacturing, Poland excepted. August PMIs improved in Czech Rep. and Romania. In Hungary, the index was little changed (51.3). Poland remains the outlier with continuous contraction since May 2025, in stark contrast to its growth outperformance in the region.
Türkiye: A welcome growth rebalancing. In Q2, real GDP growth accelerated to 1.1% q/q thanks to a strong contribution of net exports (+1.6% q/q). Private consumption contracted by 1.3% q/q in line with credit softening, and investment in machinery & equipment rebounded (+2.4%). In year-on-year terms, GDP growth slowed from 2.6% to 2.3%. This growth rebalancing is welcome both for external accounts and price stability (in August CPI inflation was +1.8% m/m and 31.5% y/y). Upcoming: interest rate decision (Thursday).
Gulf countries: Non-oil activity continues to recover. The UAE and Kuwait saw the strongest increase in August. The UAE’s PMI reached 55.3, its highest level since December 2024 while Kuwait’s PMI remained above 50 for the second month in a row (53.6 in August). Saudi Arabia’s PMI also rose to a six-month high of 53.8, although activity remains below its long-run trend. By contrast, Qatar continues to suffer; its PMI declined from 48.5 to 47.6.
Senegal: Debt restructuring and preliminary agreement with the IMF reached. The IMF will provide USD 2.2 bn of financial support over three years, conditional on strong fiscal consolidation measures.
ASIA
China: Isolated at the G20 as services activity rebounds and the yuan firms to a multi-year high. The US accused China of scuppering consensus at the (US-hosted) Finance Ministers and Central Bank Governors G20 meeting by refusing to sign up to eliminate non-market policies and practices that exacerbate imbalances, as well as objecting to language about the smooth functioning of global supply chains for critical inputs (China blamed the US in return). China's services PMI published by RatingDog rose to 51.4 in August from 50.4 in July, above expectations, contrasting with signs of weak demand across the broader economy. USD/CNH dipped to 6.7095, its lowest level since early 2023.In the first seven months of 2026, the volume of housing sales contracted by 13% y/y (after -10% in 2025). New measures to reduce the risk of unfinished building projects and improve confidence in the residential property market were unveiled by the authorities. Upcoming: August inflation (Wed).
India: Upside growth surprise but recent weakening in momentum. Real GDP grew by 7.8% y/y in Q1 FY2027, with services accounting for around 66% of real GVA growth, while a marked pickup in bank credit supported resilient household consumption and a sharp acceleration in investment. Exports also provided a significant boost (+12% y/y), led by a 24% increase in machinery and electrical equipment export volume, reflecting India’s growing role in global electronic equipment and smartphones supply chains. Yet, momentum in manufacturing activity weakened in August, with the PMI falling to 52.8 from 53.5 in July, its lowest level in five years.
Southeast Asia: manufacturing remains resilient, driven by electronics/AI-related external demand, despite a slight loss of momentum. The ASEAN manufacturing PMI eased to 52.3 in August from 52.8 in July, supported by sustained growth in output and new orders. The Philippines outperformed with its PMI surging to 54.9 from 51.8, the strongest reading since December 2016. Vietnam’s PMI also rose to 53.3, its highest level since February. Thailand’s PMI remained one of the region’s strongest in August (53.8). Malaysia’s expansion weakened (the PMI declined to 50.2) while Indonesia lagged with the PMI slipping back below 50 to 49.8.
South Korea & Taiwan: IA-driven windfall increases fiscal policy leeway. In South Korea, 2027 fiscal revenue is expected to rise by 30%, supported by semiconductor-driven tax receipts; the government’s budget prioritises long-term growth, addresses economic polarisation, and aims to strengthen fiscal sustainability. In Taiwan, the boom in exports of AI goods has also led to a strong rise in fiscal revenue, which translates in narrower fiscal deficits and greater spending. The government recently proposed a 18% increase in defence spending in the 2027 budget as well as a 40% in social welfare spending. In both Taiwan and South Korea, the manufacturing PMI declined slightly in August but remained largely above 50.
LATIN AMERICA
Brazil: Growth slowdown. Real GDP increased by 2.0% y/y in Q2 2026, but growth slowed sharply on a q/q basis to 0.5% in Q2 from 1.1% in Q1. Private consumption was weak (-0.4% q/q in Q2) while agriculture and external demand provided some support. The manufacturing PMI weakened meaningfully in the summer (to 47.5 in July and 46.3 in August), and the short-term growth outlook is sluggish.
Chile: weaker copper output adds to concerns over tightening global supply. July marked another weak month (-9.4% y/y), with production down by close to 7% in the first seven months of the year.
COMMODITIES
New highs for energy prices across the board. Brent prices rose by 6.5% over the week to 95$/b, the highest level since end-July. US SPR continue to decline at a fast pace (-3.1 mb w/w for the week ending 28th August). Diesel crack spreads reached new highs this week both in Europe (84 $/b) and in the US (> 100$/b). LNG prices hit new highs since 2023 in Europe (TTF reached 75 €/MWh during the week before declining to 70 €/MWh) and in Asia (24 USD/mbtu for JKM).
