TS Pulse: Summer is over

Whether it’s the August Bank Holiday in the UK or Labour Day in the US, the traditional markers for the end of summer have passed for markets and the next set of central bank meetings are on the horizon.

• US jobs data surprised markets with a much larger than expected 162k increase in nonfarm payrolls in August, against market forecasts for around 56k, while June and July's numbers were revised up by a combined 55k too. If this feeds through into the next inflation figure, we believe this could increase the market’s expectation for a hike by the Fed.  
• Renewed fighting between Iran and the US pushed the oil price back up above $99 for the first time in June, maintaining fears around sustained high inflation and adding to the pressure on central banks to raise rates. The market has a full hike priced in for the ECB at this week’s meeting, a 58% chance the Fed hikes next week, and just a 9% chance the Bank of England does. Both the US and UK have a full hike priced in for their December meetings, with all three expected to hike again in Q1 2027.  
• EU Inflation hit 3.3% in August, as expected, while the core measure was slightly below at 2.4% instead of 2.5%, although unemployment held at 6.4% vs expectations of a drop to 6.3%. Given the already priced-in hike for the ECB, this moved little in rates markets.
• German industrial production dropped 1.1% in July, missing market forecasts for a 0.1% increase and reversing from a downwardly revised stagnation in June. It was the fourth monthly decline so far this year, mainly driven by a 9.2% fall in automotive production following weeks of production shutdowns.
• UK retail sales rose 0.5% year in August, marking the weakest growth in nearly two years. Shoppers cut back on big-ticket purchases such as furniture and household appliances, while health and beauty products saw more buying. This is a trend we are seeing globally now, highlighted in Australia where Westpac's Consumer Sentiment Index dropped 5.2%, reversing a 6.0% rise the prior month and marking its first decline since June, as higher fuel prices and concerns over further rate hikes weighed on confidence.

Source: Bloomberg; pricing as per 8 September 2026

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