“We’ll Have to See What Happens”
August 6, 2026
Pick your cliche. Waiting for Godot. It ain’t over til the fat lady sings, or the Trumpian favorite that we’ll have to see what happens. Iran and Oman, which occupies the other side of the narrow Strait of Hormuz, are reportedly crafting an interim commitment to partially but not fully open the shipping passageway. Military skirmishes have become less fierce but are not entirely eliminated, and shipping traffic remains below normal. U.S. oil inventories are quite depleted. The matter of Iran’s supplies of enriched uranium that was central to the initial U.S. and Israeli attack has been put to the side. Something specific was predicted this week, and that timetable is now getting short. Whatever the announcement, most experts on Middle East geopolitics doubt that a lasting agreement will be reached anytime soon especially given America’s reluctance to use ground forces. Meanwhile, a risk persists that the twin wars in the region could merge and take on elements of a global conflict. Every central banking notice includes a caveat about Middle Eastern geopolitical uncertainties posing an upside inflationary and downside growth threat to baseline forecasts.
But life goes on, and investors today are looking ahead to tomorrow’s release of U.S. July labor market data. The tea leaves are not entirely consistent. On the one hand, the ADP estimate of July’s private sector jobs total produced an unexpected decline of 44k. On the other, a rare streak of three weeks in which new jobless insurance claims stayed under 200k happened in the second half of last month. Also July job cuts reported by Challenger were at a two-year low, and JOLTS data on job hires and quits showed a pretty steady picture.
The dollar overnight edged 0.1% higher against the euro, yen, peso, rupiah, won and in terms of the weighted DXY index.
Futures trading in U.S. stocks have depressed the Nasdaq by three-fourths of a percentage point. The DOW, SPX, and Russell 2000 are hardly changed on net, however. Ten-year sovereign debt yields are up four basis points in Switzerland, three bps in the U.S., two bps in Great Britain but unchanged in Germany, France, Italy or Spain. The 10-year Japanese JGB yield has settled back four basis points.
Several Asian stock markets closed lower today, including drops of 4.6% in the South Korean Kospi, 1.5% in Hong Kong’s Hang Seng, and 0.9% in the Japanese Nikkei. Equities show inconsequential movement in the U.K. and Germany but have risen by 0.7-1.1% in France, Italy and Spain.
The price of West Texas Intermediate crude oil has rebounded 1.6% to $76.4 per barrel, while silver and Bitcoin are 0.9% and 0.6% lower so far today.
European data released today featured a 0.3% drop in the volume of retail sales in the euro area during June, higher British and Euroland construction purchasing manager indices, and a much bigger-than-forecast rise in German industrial orders.
- Retail sales in the euro area had been projected to rise, and the monthly 0.3% slide was associated with a 23-month low year-on-year rise of only 0.7%, down from 1.9% in May. Sales fell on month by 1.1% in Germany and 0.5% in France.
- Britain’s construction purchasing managers index had followed up a 6-year low of 38.2 in May with an almost equally depressed 38.4 reading in June before climbing to a 4-month high of 44.7 last month. Its been south of the 50 neutral level since early 2025.
- Euroland’s better-than-assumed construction PMI also reached a 4-month high in July of 44.3. Among the bloc’s three largest economies, the French and Italian readings were at 5- and 2-month highs of 41.5 and 49.1, but the German construction PMI fell by 2.5 points to a 3-month low of 42.1.
- Despite a mere 0.2% uptick in foreign demand, German industrial orders jumped 3.1% in June, ten times more than the expected rise and associated with a 6.5% increase compared to a year earlier. Second-quarter orders were 1.3% above the first-quarter level.
A 0.7% drop in Spanish industrial production in June trimmed the 12-month rate of increase to 1.1% from 3.1% in the year to May.
Italian industrial production also underperformed projections in June, falling 1.0% on month and by 0.6% versus a year earlier.
Consumer price inflation in Sweden shrunk to a 14-month low of 0.2% in July from 0.7% in June. Core CPI of 0.7% was at a 67-month low. Taiwan and Cyprus recorded similar consumer price inflation rates of 2.5% and 2.9% last month.
Ireland’s composite and service sector purchasing manager indices improved to 8-month highs of 54.9 and 55.2.
Canada’s composite and service sector PMIs likewise rose last month but recorded sub-50 readings (49.7 and 49.1) for a second straight month.
Central bank interest rate changes were announced in Brazil, Moldova and the Czech Republic. My comment on a 25-basis point reduction of the Brazilian Selic rate to 14.0% can be read here. The Moldovan rate were lifted by 50 basis points, while the Czech rate was not changed this time.
The National Bank of Moldova’s base rate was increased to 7.5%, a 39-month high. This move followed increases of 150 basis points in May and 50 basis points in June undertaken to counteract intensifying effects from fighting in the Middle East. “The NBM’s decision to continue its restrictive monetary policy measures was adopted in the context of intensifying inflationary pressures stemming both from the supply side, due to unfavorable trends in international prices for energy resources, food products, and raw materials, and from the domestic demand side, supported by favorable dynamics of household income.” Moldovan consumer price inflation of 6.5% at midyear was at the top of a 3.5-6.5% targeted corridor.
The Czech 2-week repo rate had been increased by 25 basis points to 3.75% at the previous review in mid-June. That was the first change since a similar-sized cut in May 2025. In July, consumer prices rose 0.6% on month and 1.7% on year. In the period ahead, inflation risks are skewed to the upside.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: British and Euroland construction PMI results, Central Bank of Brazil, Czech National Bank, French and Italian industrial production, German industrial orders, National Bank of Moldova
ShareThis
