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The Investment Institute by UniCredit

The Bottom Line wraps up the week, highlighting key events and data releases for the upcoming one.

August outlook: Jackson Hole beckons 31 July 2026

OPEC+ is set to complete the restoration of previously curtailed supply, while upcoming US data are likely to show a labour market in good shape and further easing of inflationary pressure before Middle East tensions escalated anew. Markets will also begin focusing on Jackson Hole, where investors will be looking for greater clarity on the Fed’s reaction function under Fed Chair Kevin Warsh. TOP STORIES OF THE UPCOMING WEEKS

OPEC+ signals pause after final production hike OPEC+ is expected to approve a final quota increase of roughly 0.2mb/d for September at its virtual meeting on 2 August, completing the phased restoration of about 1.65mb/d of previously curtailed supply. The decision reflects uncertainty over the impact of the Iran conflict, which has disrupted exports and left effective supply growth well below headline quota increases. While geopolitical risks remain elevated and price volatility is likely to persist in the near term, we expect oil markets to stabilise gradually over the coming months as supply conditions become clearer and regional tensions ease.

US NFPs probably regained some traction US nonfarm payrolls (NFPs) surprised to the downside in June, recording growth of only 57k amid a large correction in the leisure and hospitality sector. The unemployment rate edged down by 0.1pp to 4.2%, reflecting a decline in the participation rate to its lowest level since 2021. For July, we have pencilled in a renewed acceleration in job creation, to 110k, broadly in line with the three-month average. We expect the bulk of new hiring to be recorded in business services and health care, while employment in leisure and hospitality is unlikely to have rebounded meaningfully as World Cup-related hiring unwound. The unemployment rate probably held at 4.2%, with risks tilted to the upside if participation recovers somewhat. Average hourly earnings probably continued to grow at 3.5% yoy, which is unlikely to be inflationary given that productivity is increasing rapidly. Overall, the US economy remains in a low-hire, low-fire environment.

The Investment Institute The Bottom Line by UniCredit 31 July 2026

We expect a benign US CPI report Following a dovish outcome in June, we forecast both headline and core CPI to increase by 0.2% mom in July, pushing both yearly rates down by 0.1pp, to 3.4% and 2.5%, respectively. Gasoline prices have been on a roller-coaster ride, declining in the earlier part of the month before resuming a strong upward trend. On average, they were probably lower than in June. We expect core inflation to show further signs that the tariff- related boost is weakening, although some prices might record temporary rebounds following last month’s pronounced weakness. AI-driven upward pressure has probably continued, but only a small number of items are likely to have been affected. Housing inflation has probably remained on a shallow downward trajectory. Based on current information, gasoline prices will resume exerting strong upward pressure on headline inflation in August.

Eurozone PMIs sensitive to events in the Middle East Since March, fluctuations in eurozone PMIs have largely reflected geopolitical developments in the Middle East and their effects on oil and gas prices. Phases of rising tensions and higher energy prices have caused deterioration in the composite PMI, driven by the services component, while manufacturing activity has been supported by stockpiling as firms move to pre-empt possible supply disruptions and cost increases. If this pattern continues to hold, given the renewed deterioration of conditions in the Middle East, the PMIs for August would probably decline from 51.9 (still a preliminary estimate, the final reading will be published next week) to 51.0. However, the eurozone economy is likely to remain resilient. The GDP outcome for 2Q26 has confirmed the PMI survey’s tendency to underpredict actual economic growth, showing that readings of the composite PMI moderately below 50 remain consistent with positive…