The US Treasury bought yen alongside Japan's Ministry of Finance on August 1, the first joint US-Japan currency intervention in more than a decade; a leaked Bessent document showed the US planned to buy US$5bn to US$10bn of yen, Nikkei Asia reported, with the yen near 40-year lows. The day before, the Bank of Japan held its benchmark rate at 1%, pausing after the June hike, while warning that core inflation is running above its 2% target. The BOJ's Summary of Opinions from the July 31 meeting, released August 10, showed the nine-member board split between members who wanted to hold and assess the impact of recent hikes and those who wanted to tighten faster; the document named Middle East oil prices, AI data-center energy demand, and yen weakness as the three upside risks to inflation and signalled September as a candidate date for the next move. The rate hold plus joint intervention reactivates yen-carry-unwind dynamics that disrupted global markets in August 2024. The People's Bank of China confirmed on August 1 it will maintain appropriately loose monetary policy through H2 2026, keep liquidity ample, and facilitate panda bond issuance; the explicit H2 commitment gives markets forward guidance while preserving room for rate cuts. The Bank of Russia's July regional report found Russian consumers splitting large purchases into installments, trading down to cheaper goods, and hunting discounts, a shift it characterises as a move toward more rational consumption under sustained high rates.
The US Federal Reserve held the federal funds rate at 3.50-3.75% on July 29 with a 9-3 vote, the widest dissent since 2005; three members voted for a hike; Chair Kevin Warsh said the Fed "would not hesitate to act against inflation." The Dow fell 1,100 points and the Nasdaq entered correction territory. The eurozone grew 0.4% in Q2 2026, double the market consensus; re-accelerating inflation is sharpening ECB September hike expectations. China's NBS manufacturing PMI fell to 49.2 in July, below the 50-point expansion threshold, as domestic demand slumped and typhoons disrupted activity; Beijing signalled accelerated fiscal spending.
South Korea's KOSPI triggered back-to-back circuit breakers on July 28-29, the first time in the exchange's history, shedding 40% from its June peak. Meta's Q2 free cash flow fell 91% to US$784 million as capex consumed nearly all operating revenue. Microsoft's Azure cloud grew faster than expected in the same quarter, sharpening the divergence between AI infrastructure operators and AI infrastructure spenders.
Brazil's Copom cut the Selic rate to 14.00% on August 5, the fourth consecutive reduction; analysts trimmed their 2026 year-end Selic forecast for the first time since March, signalling the easing cycle may pause or end sooner than markets anticipated.
Indonesia's Q2 2026 GDP grew at 5.29%, down from 5.61% in Q1, pressuring President Prabowo Subianto's stated 8% growth target; state wire Antara framed the result as "momentum remains strong" while the Jakarta Post and Tempo called the full-year target "a tall order"; the Finance Ministry maintains a 5.6-6% full-year projection and expects a second-half recovery backed by stimulus and Bank Indonesia coordination.
The US S&P 500 and the Dow Jones Industrial Average both closed at all-time record highs on August 4, driven by AI-linked earnings that exceeded historical standards and by investor hopes for a US-Iran war deal; oil prices fell on the Iran-deal sentiment, improving corporate profit outlooks. The US dollar held flat on the session. Persistent inflation and elevated US gas prices remain headwinds but have not broken the equity rally. The record close sits alongside Brazil's rate cut and divergent global monetary conditions, and precedes the next FOMC decision.
The US Bureau of Labor Statistics reported a net loss of 23,000 nonfarm payroll jobs in July 2026, sharply below the Dow Jones consensus forecast of an 83,000 gain; prior months were revised down by a combined 103,000, indicating the labor market deterioration predates July; average hourly wage growth decelerated to 3.2%; market pricing for a US Federal Reserve rate hike in September fell sharply after the release. The combination of a headline miss and large prior-month revisions shifts the September FOMC calculus from rate-hike toward hold or cut, complicating the Fed's stated inflation-fighting posture.
Watch: whether the BOJ's inflation warning precedes an emergency hike before September; yen-carry unwind trajectory if the yen strengthens further past the intervention band; FOMC minutes for dissenters' reasoning; ECB September decision as Gulf energy premium feeds eurozone headline inflation; China's fiscal stimulus specifics; whether the Iran-US deal, if signed, reduces the Brent and LNG war-risk premium embedded in eurozone inflation prints; Copom statement language for any change in forward guidance pace; Indonesia Q3 GDP and whether Bank Indonesia rate decisions compress domestic demand further; any downward revision to Indonesia's Finance Ministry 5.6-6% full-year projection; whether the S&P record prompts any FOMC shift in rate-path language; dollar trajectory as an EM stress indicator.
