Markets cheered Jerome Powell’s signal that rate cuts may come as soon as September.

But with jobless claims creeping higher, furniture stocks sliding on tariff threats, and global trade still adjusting, investors face more than one catalyst to navigate this week.

Here’s what to watch:

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The Big Picture

Commodities

Soybeans Power Ahead as U.S. Farm Economy Balances Export Demand and Strong Yields

Soybeans in the United States are showing renewed strength, climbing to their highest levels in months, driven by robust export activity and stronger demand for biofuel inputs.

The trend highlights how agriculture remains a crucial anchor of U.S. trade and energy markets, even as farmers contend with favorable yields that could expand supply.

Corn and wheat markets, by contrast, remain more unsettled. Corn production potential is strong across much of the Midwest, which may temper any sustained price momentum.

Wheat has shown signs of recovery but continues to face pressure from shifting global demand and competition from other exporters.

For the broader U.S. economy, the developments carry mixed implications.

Stronger soybean demand reinforces the country’s role as a top agricultural exporter, offering support for rural incomes and farm-state economies.

At the same time, abundant supplies of corn and wheat reflect both productivity gains and the challenges of securing consistent global buyers in a crowded marketplace.

The agricultural sector is closely tied to trade flows, biofuel policy, and global consumption trends.

With soybeans gaining traction and other grains sending more uncertain signals, America’s farm economy sits at a crossroads where export demand and domestic energy use could help stabilize an otherwise uneven outlook.

Oil and Gas

U.S. Drilling Stays Cautious as Energy Sector Balances Growth With Restraint

Oil and gas drillers in the United States are holding back from a significant expansion, keeping activity near multi-year lows despite production edging higher.

Rig counts remain subdued, reflecting a sector that is cautious in committing new capital despite steady global demand.

This cautious drilling stance highlights both strength and vulnerability: strong enough to keep energy flowing, but restrained enough that global disruptions can ripple through faster than in the past.

The restraint underscores a shift in the energy landscape where U.S. production capacity is strong, but operators are prioritizing efficiency and financial discipline over aggressive growth. 

For the broader economy, that means supply is unlikely to surge in a way that significantly lowers energy costs.

Instead, output is being managed in line with market signals, leaving the U.S. exposed to global price swings and geopolitical risks.

Energy stability has long been a pillar of U.S. economic resilience. 

A muted drilling environment raises questions about how the country balances its role as the world’s largest producer with the need to maintain affordable energy for households and industries.

With natural gas activity holding steady and oil rigs drifting lower, the near-term outlook points to measured supply rather than dramatic expansion.

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Economy

Recession Risk Climbs to 50% as U.S. Growth Hits a Standstill

Barclays analysts warn the U.S. economy has slipped into what they call a “stall state,” raising the likelihood of a downturn within the next two years.

Their model, which tracks shifts in employment and unemployment trends, indicates that growth has slowed enough to leave the economy vulnerable to recessionary pressures.

The concept of a stall state represents an environment where momentum weakens but has not yet transitioned into outright contraction.

For households and businesses, this translates into a climate of uncertainty, as job growth slows, consumers become more cautious, and companies are hesitant to expand or hire aggressively.

This assessment comes at a time when policymakers are already weighing interest rate cuts to stabilize growth.

If demand continues to cool, the Federal Reserve may feel greater urgency to act, though the impact of tariffs and higher costs across supply chains could complicate its choices.

For the broader U.S. economy, the warning underscores a delicate balance: avoiding a recession while managing inflation and supporting employment.

With odds of a downturn rising to roughly one in two, the following year will be pivotal in determining whether the U.S. can navigate a soft landing or face a more severe reset.

Metrics to Watch

• Labor Market Tension: New jobless claims rose to 235,000, above expectations, while continuing claims climbed to 1.97 million, the highest since 2021.
  
  Rising unemployment rolls suggest a fragile jobs backdrop that could make the Fed’s easing calculus more urgent.
  
  

• Housing and Construction: July housing starts came in at 1.30 million with permits at 1.39 million, showing a flat trend as multifamily demand offsets weak single-family activity.
  
  Builder sentiment edged up to 34 in August but remains near decade lows.
  
  

• Wholesale Inflation Fallout: The Producer Price Index jumped 0.9% in July, the sharpest monthly increase in three years.
  
  Investors are watching whether this accelerates core PCE later this month, a key hurdle for aggressive rate-cut bets.
  
  

• Fed’s New Playbook: The Fed retired its 2020 policy of tolerating inflation overshoots and re-committed to its 2% target.
  
  This shift could temper expectations of a deep easing cycle, even if September delivers a cut.

Market Movers

🪑 Powell Opens the Door
Powell’s Jackson Hole remarks emphasized growing risks in the labor market, lifting equities on expectations of a September rate cut.

Still, he cautioned tariffs are visibly raising costs, a reminder that inflation isn’t fully subdued.

💳 Fed Framework Reset
The Fed formally ended its “overshoot” policy, underscoring that price stability remains paramount.

While meant to simplify messaging, it may also limit room for ultra-aggressive easing if inflation proves sticky.

🛋️ Furniture Stocks Slide
Trump’s surprise threat of tariffs on imported furniture sparked steep declines in Wayfair, RH, and Williams-Sonoma, while domestically oriented names like La-Z-Boy and Ethan Allen rallied.

Supply chains already strained by tariffs could face more upheaval.

📉 Jobs Market Looks Fragile
Hiring has slowed to near pandemic-era lows, while layoffs remain muted.

Economists warn that even a modest rise in firings could tip the economy into outright job losses, a dynamic Powell flagged as a growing risk.

🌍 Trade Flows in Flux
Europe is seeking stronger non-U.S. trade ties as tariffs linger, and Japan’s exports to the U.S. fell more than 10% in July.

Automakers are cutting prices to hold market share, sacrificing profitability in the process.

Market Impacts

Equities: U.S. stock futures were flat Sunday night after the Dow closed at a record high on Friday, surging nearly 850 points.

The S&P 500 gained 1.5% and the Nasdaq advanced 1.9%, fueled by Powell’s dovish tone at Jackson Hole.

Expectations for a September rate cut jumped to 84%, with traders now eyeing Nvidia’s earnings on Wednesday as a potential catalyst.

Reports from Dell and Marvell later in the week could also determine whether the recent rotation out of tech continues or if momentum returns to growth leaders.

Beyond earnings, Friday’s PCE inflation print is the next key data test.

Bonds: Treasury yields slid after Powell suggested the Fed may adjust policy as risks to the labor market rise.

The 10-year yield dropped 7.5 basis points to 4.26%, while the 2-year fell 10 basis points to 3.69%.

Markets are now pricing in a 91% chance of a September cut, with the possibility of additional easing by year-end.

Traders expect curves to steepen once cuts begin, though near-term moves are likely range-bound until more labor data arrives.

Currencies: The dollar fell sharply, with the dollar index sliding to 97.58 from 98.7 before Powell’s remarks. The euro climbed 1.2% to $1.1739, and the yen strengthened to 146.62.

Traders are increasingly betting that the Fed will pivot sooner rather than later, with 91% odds of a September cut now priced in.

Currency markets remain sensitive to labor indicators, which Powell highlighted as the Fed’s top concern.

Commodities: Gold rebounded 1.1% to $3,374 per ounce as Powell’s comments bolstered rate cut bets, with futures closing at $3,419.

Analysts say a break above $3,400 could set up a test of $3,450 if upcoming jobs data disappoints.

Oil prices steadied, with Brent closing at $67.73 and WTI at $63.66, logging their first weekly gain in three weeks.

Supply cuts, U.S. inventory drawdowns, and stalled Ukraine peace talks supported prices, though concerns over weaker European demand capped gains.

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Key Indicators to Watch

📅 New Home Sales (Monday, Aug. 25)
July sales are expected at 632,000, up slightly from June’s 627,000. A stronger reading would suggest housing demand is stabilizing despite affordability headwinds.

📅 Durable Goods Orders (Tuesday, Aug. 26)
Headline orders are projected to fall 4.1% after June’s 9.4% plunge, while ex-transportation is expected to rise modestly. This report will show whether core business investment is holding up.

📅 Consumer Confidence (Tuesday, Aug. 26)
The August survey is forecast at 96.5, down from 97.2. Sentiment will be closely watched as households balance higher prices with a cooling labor market.

📅 Case-Shiller Home Price Index (Tuesday, Aug. 26)
June prices for 20 major cities are projected to rise 2.8% year over year. Continued gains could highlight ongoing affordability challenges even as mortgage rates ease.

Everything Else

• U.S. retailers roll out “recession specials” as weakening sentiment pushes shoppers toward discounts.

• The Bank of England warns that sluggish growth remains the U.K.’s most acute economic challenge.

• American business activity strengthened in August, led by a rebound in factory output.

• U.S. existing home sales rose in July, surprising economists who expected further weakness.

• A severe storm battered the Midwest, flooding cities and disrupting regional power grids.