Session Wrap — 06.08.26
Elevator Pitch
Another quiet session across markets, with very little to move them in any particular direction. Market focus is on tomorrow’s NFPs, as well as continuous earnings reports. Nothing new means nothing new.
Macro Update
US Initial Jobless Claims for the week ending August 1st came in at 199k, just below the 201k consensus and up from 197k prior. The 4-week average sits at 198.75k. Revelio Labs’ private Nonfarm Payrolls estimate for July came in at 79.2k, a sharp deceleration from the prior 258.5k, revised down to 125.4k.
German Factory Orders for June beat significantly at 3.1% MoM against a 0.3% consensus, up from 1.9% prior. EU Retail Sales, however, disappointed, with the YoY figure at 0.7% against a 1.0% expectation and down from 1.6% prior, while the monthly figure fell 0.3% versus a 0.2% expected gain.
Canadian PMI data continued to improve without yet breaking into expansion. The Composite PMI for July rose to 49.7 from 47.9, and Services PMI improved to 49.1 from 47.1.
Central Bank Guidance
Federal Reserve: Daly said tariffs, energy, and AI-related shocks have driven the recent uptick in inflation, though she noted some evidence that tariff impacts are beginning to fade. She added that an end to the Middle East war should help bring inflation lower, while flagging that technology investment continues to add upward pressure. In separate remarks, she said the Fed is facing different types of risk when setting rate policy, reiterating her full support for holding rates steady in July and noting the Fed still needs to gather more data before committing to the next move, while stressing the Fed should be ready to act if the inflation situation gets out of hand.
Fed Chair Warsh is reportedly sticking with his lean messaging approach despite some backlash, according to sources cited by the FT. Warsh would reportedly be willing to hike in September if upcoming inflation prints run hot and markets move to price in such a move. He acknowledged some communication mistakes in his first few weeks but does not see that as grounds for a course reversal. The CME tool currently implies just under a 55% probability of a 25bp hike in September. The main takeaway from Warsh’s July press conference was that he welcomed the recent tightening in financial conditions, effectively doing some of the Fed’s work for it, while remaining firm in his commitment to avoiding forward guidance, a stance that has contributed to a pronounced steepening of the yield curve. Separately, Cook warned she is prepared to vote for rate increases if inflation fails to slow, cautioning that five years of above-target inflation risks becoming entrenched in price and wage-setting behaviour, though she acknowledged fading tariff effects and lower oil prices could yet remove the need for tighter policy.
Geopolitics
Strait of Hormuz: Emerging Agreement and Approval Process
An agreement to reopen the Strait of Hormuz is reportedly approaching, with senior US officials and sources in mediating countries suggesting an announcement could come as early as that night. The emerging deal comprises a 60-day temporary Oman-Iran arrangement with possible extension, a renewed US-Iran ceasefire, inbound vessel traffic routed through Iranian maritime space, outbound traffic routed through Omani maritime space in coordination with Iran, no transit or user fees during the 60-day period, mine clearance in the central channel within 30 days, subsequent two-way use of that cleared channel, and follow-on negotiations between Oman and Iran on a permanent arrangement. Two regional sources said Iranian Foreign Minister Araghchi gave approval in principle over the weekend, pending sign-off from Iran’s Supreme Leader and the Supreme National Security Council, with a senior American official and a regional source subsequently confirming Iranian leadership completed that approval process on Tuesday. Separate sources confirmed Iran and Oman have agreed on the broad framework, describing a 60-day agreement without passage fees, after which parties would return to and activate Article 5 of the memorandum of understanding, with regional parties potentially participating in demining, though the agreement still requires National Security Council approval. Notably, Iran interprets Article 5 as granting it total control over the waterway, while the US argues it guarantees open international access, a meaningful gap in interpretation. Indirect US-Iran contacts through intermediaries have reportedly entered a final stage, and a US official reiterated that the Strait of Hormuz is an international waterway not controlled by any single party over its lanes or transits.
Iran: Alternative Strategic Plan and Corridor Details
A reported initial text of an Iranian strategic plan for managing the Strait would prohibit passage of vessels belonging to the US, Israel, and other “hostile” countries, bar any Israel-linked military or civilian vessels, and restrict vessels or cargoes linked to actions against the “Resistance Front,” while barring parties that have caused damage to Iran from transiting until compensation is paid and imposing fines of up to 20% of cargo value on violators. The plan, still under expert review, would also assign the Iranian government and armed forces responsibility for navigation guidance, traffic monitoring, and security and environmental protection in the Persian Gulf. Separately, a Foreign Ministry source said that under the Iran-Oman negotiating framework, ship entry would use a northern corridor near the Iranian coast and exit a southern corridor near Oman, with both corridors eliminated after a set deadline in favour of a middle corridor where entry is managed by Iran and exit jointly by Iran and Oman, funded through service fees covering insurance, refuelling, and environmental costs. The source denied reports of an Iran-Oman dispute over a 7% or 3% cargo-value fee.
Yemen: Houthi Military Operation Against Saudi-Backed Forces
Yemen’s Armed Forces Spokesman announced an impending large-scale military operation, which the Houthis subsequently confirmed as targeting Saudi-backed troop concentrations in Al-Ruwaik, Al-Abr, Al-Thaniyah, and other camps, stating a large number of camps, troop concentrations, warehouses, and weapons depots in the Al-Wadiah area were destroyed. Separate reporting indicated a Houthi precision strike on Saudi-backed force bases in Marib province. The Houthis stated they will continue their “blockade for blockade” policy until the blockade on Yemen is lifted.
US Political and Trade Commentary
Trump, speaking in Las Vegas, said he “loves tariffs,” described Canada’s leadership as “nasty,” and said business is “roaring back” in the US. On Iran, he said he would rather reach a deal, reiterating that the US had been prepared for its biggest attack since World War II against Iran, but that Iran “called” and talks are now underway, adding that Iran “respects” the US.
Regional Diplomatic Movements
Sources reported that Iranian Foreign Minister Araghchi’s visit to Pakistan is expected by the end of the week or early the following week.
Cross-Asset Snapshot
Oil 2.7% stronger with CL Futures at 77 USD
DXY 0.25% stronger at 99.95
Gold Spot flat at 4250
BTCUSD flat at 64600
US 02s10s YC Spread 0.2% flatter at 0.429%
SP500 0.25% weaker with ES Futures at 7730
VIX 3% lower at 15.40
→ Overall a very mixed session. My suspicion is this reflects a two timeframe session with very little real positioning and mostly short term flow.
Trader’s Commentary
Yes, USDJPY moved. So I’m moving my stop loss to break even. From here, the pair can do whatever it wants.
No this is not a joke, ask my community. This is my real entry, real SL and real TP.
Luck. No doubt.
If you want to get “lucky” too, push the button.
It’s carry positive, so even though I have the patience of a five year old, I’m keeping it in the book for tomorrow’s NFPs. Maybe it works, maybe it doesn’t.
That’s it for this week.
Thanks for reading and supporting me. Have a nice weekend.
Best,
René Steiner
Macro Strategist