The past week saw financial markets grapple with the implications of Fed Chair Jerome Powell's speech at the Jackson Hole symposium. In a decisive shift from earlier Fed commentary about gradual rate cuts, Powell declared that "the time has come for policy to adjust" and the Fed does not want to see further labour market cooling. This opened the door to potentially faster and larger rate cuts, with the pace determined by upcoming data, especially the August jobs report.

Markets reacted swiftly to the prospect of a more accommodative Fed. The US dollar fell sharply, bond yields declined, and equities rallied, led by a 3% surge in the small-cap Russell 2000 index. However, these moves partially reversed on Monday as markets paused to digest the news. Notably, Fed funds futures showed only a modest increase in the probability of a 50bp cut in September to around 36%.

On the data front, signs continued to point to a US slowdown, seemingly justifying the Fed's stance. Durable goods orders rebounded less than expected in July, while regional Fed surveys showed manufacturing activity stabilising at weak levels. Consumer confidence data and the August jobs report will be key to watch this week.

The other major focus was rising geopolitical tensions. An escalation between Israel and Hezbollah over the weekend sparked concerns, though the oil price spike was attributed more to Libya's threat to cut production amid political disputes.

Elsewhere, Eurozone and UK data surprised modestly to the upside but confirmed a still-fragile growth picture. Markets are looking ahead to Eurozone inflation data and China's PMIs on Saturday for the global outlook. For now, though, with a light data calendar, attention is on Nvidia's earnings report as a bellwether for the tech sector and broader risk sentiment.

In summary, Powell's speech marked a hawkish Fed pivot that could pave the way for a faster easing cycle if the US labour market and economy continue to weaken. However, geopolitical wildcards and uneven global growth complicate the outlook. In a quiet week for data, markets may take their cue from corporate signals like Nvidia as they await the next key data and policy catalysts.