Markets creep back on hopes Warsh holds interest rates steady

Federal Reserve Chair Kevin Warsh told the Jackson Hole Symposium that inflation is running above the Fed's 2% target, with personal consumption expenditures up 0.2% and year-over-year inflation at 3.7%. Markets shrugged and closed the week up anyway, with the Dow, S&P 500 and Nasdaq all gaining ground on bets the Fed won't raise rates next month.

Meanwhile the administration escalated sanctions against Iran-linked oil smuggling, threatened China with the same treatment, and slapped 50% tariffs on select Canadian imports that triggered Canadian retaliation. The Strait of Hormuz remains jammed, with oil flows at roughly two-thirds pre-war levels and Brent crude near $89 a barrel.

Consumer sentiment fell to 51.7 in the University of Michigan's August survey, more than 11 points below a year ago, with respondents citing gas price anxiety and broader economic unease. Small businesses reported more optimism per the NFIB, tempered by supply chain disruptions affecting nearly two-thirds of respondents and 84% of wholesalers.

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