Article last updated 22 July 2025.
For all the talk of fake news, it would be hard to dream up something stranger than the actual events of the past week in the US. And, weirdly, the markets barely shrugged.
There’s been no shortage of controversy since Donald J. Trump took office less than two years ago. But even by his standards, few days have been quite as eventful as Tuesday 21 August. Paul Manafort, Mr Trump's former campaign chief, had been found guilty on eight financial fraud charges in a trial arising from the justice department probe into alleged Russian election interference. Within a few short hours, It was then revealed that the President’s former personal attorney/fixer, Michael Cohen, had pleaded guilty to violating campaign finance laws, and directly implicated the President in making the payments for the "principal purpose of influencing the election".
The President made only passing mention of the legal turmoil at a political rally in West Virginia on the evening of his former aides’ court appearances, but – referring to alleged Russian election interference – he repeatedly asked his adoring audience “Where is the collusion?” Well, it increasingly looks like one of his former advisers may be on the verge of revealing at least some of the facts relating to allegations of Russian meddling in the 2016 presidential election.
These developments undoubtedly exert greater pressure on the President and his party in the run-up to November’s mid-term elections. However, if the Republicans do manage to keep hold of both chambers of Congress then Mr Trump may be safe from impeachment; if they don’t though, his life will become more challenging.
The President – never shy about taking credit for market gains – has warned that the stock market will crash if he ever gets impeached. After last week’s courtroom events, we may not have to wait too much longer to test the veracity of these assertions. But if the lack of reaction to the President’s deepening legal woes is anything to go by, they may just be ‘fake news’.
Source: FE Analytics, data sterling total return to 24 August
Raging bull
Despite last week’s political and legal shenanigans, the S&P 500 index rose to an all-time intraday high of 2,875 on Friday. Yet another milestone was also reached at the close of business on Wednesday as the index clocked up 3,453 days since the previous bear market officially ended on 9 March 2009. This is certainly now the longest bull market since the Second World War and, by many counts, the longest bull run of all time.
Minutes from the Federal Reserve’s meeting earlier this month and comments from Chairman Jerome Powell at the Jackson Hole gathering of central bankers and finance officials signaled that a further rate hike in September was likely. However, Mr Powell’s comments did strike a slightly dovish tone, emphasising that a gradual approach to monetary tightening remained appropriate.
This week the markets will be watching a raft of data for further evidence on the state of the US economy, especially consumer confidence stats out on Tuesday and the second quarter personal consumption figures due for release on Wednesday.
The fruits of austerity
Chancellor Philip Hammond enjoyed some good news last week with the public coffers boosted by the largest July budget surplus for 18 years. The Treasury collected £2 billion more in revenues than it spent, significantly above the £1.1 billion expected by the market. This left borrowing since the start of the financial year at the lowest level since 2002 providing a welcome boost to the Chancellor, and potentially the NHS, as he prepares the groundwork for his Autumn Budget due to be delivered in November.
But UK households may not be feeling so flush. Thursday’s release of consumer credit figures is expected to reveal a further decline in the rate of debt accumulation and will provide some useful insights into whether consumers are becoming increasingly cagey amid the continuing squeeze on their incomes, or whether they’re still prepared to splash the cash.
Brexit noise is increasing again, with comments from Theresa May and news of French ‘contingency plans’ reviving fears of a no-deal Brexit, which won’t help UK consumer or business confidence. Meanwhile, an Italian budget blow-up with Brussels is growing more likely after Deputy Prime Minister Luigi Di Maio said the government may breach the EU’s three percent deficit limit. Italian bonds fell, but so far the fallout has been contained.
Bonds
UK 10-Year yield @ 1.44%
US 10-Year yield @ 2.84%
Germany 10-Year yield @ 0.37%
Italy 10-Year yield @ 3.20%
Spain 10-Year yield @ 1.43%
Economic data and companies reporting for week commencing 6 August
Tuesday 28 August
US: August Conference Board consumer confidence; July advance economic indicators; June Case-Shiller
EU: euro area July M3; French INSEE consumer confidence
Bunzl: second quarter earnings release
Wednesday 29 August
US Q2 GDP (second estimate); July pending home sales
EU: German GfK consumer confidence; France Q2 GDP (preliminary); Turkey July trade balance
James Fisher and Sons: second quarter earnings release
Petrofac Limited: second quarter earnings release
Thursday 30 August
US: July personal income
EU: euro area August consumer confidence; German August labour market report, CPI
Chesnara: second quarter earnings release
Hunting: second quarter earnings release
Hays: second quarter earnings release
Friday 31 August
US: University of Michigan consumer sentiment
EU: Fitch rating announcement on Italy; euro area August CPI; July labour market report; German July retail sales
Japan: July labour market report; June industrial production
