Persistent noise from the Middle East conflicts and war in Ukraine retain background status until situations on the ground and in at least two bodies of water change. The knowable near-term Washington policy risk calendar likely will not affect those military engagements or sentiment. Wars might influence Senate fiscal policy deliberations this week, but not before Wednesday at soonest. And even then, war funding drives fiscal uncertainty through mid-September when shutdown risk displaces all else – again, based on what can be discerned today.
Likely this week in DC won’t matter to market narratives as the Senate prepares to join the House of Representatives in summer recess (this could change for both). Deals to confirm acting AG Blanche and approve crypto bill seem unlikely. President Trump’s lack of support for meaningful conflict of interest/ethics language dooms the latter. Mounting roadblocks to negotiate language blocking the “revenge fund” and First Family IRS audit indemnification likely sidelines the former.
My sense remains that appropriations rather than reconciliation legislation is a more likely funding path for defense money this year. Reconciliation requires several heavy lifts, including adherence to stiff Senate rules and a few members’ deficit concerns. We’ll know by midweek whether, how, and when Senate leaders might try to accomplish reconciliation next month. Appropriators only need partisans’ willingness to allow H/S money negotiations. That will not be easy as Ds will insist on domestic money equivalent to defense dollars, but that might be the easier path than reconciliation bargaining.
Midterms. Please join our Midterms update conversation with Jacob Rubashkin, Deputy Editor at Inside Elections, Tuesday (8/4) at 10:30am ET. Jacob will provide his latest takes on polling, recent elections, key political drivers, Iran, and of course how AI/data centers are beginning to fit into the mix. Jacob will draw on his deep experience analyzing House, Senate, gubernatorial, and presidential races. Known for his sharp and nonpartisan perspective, Jacob will break down key battlegrounds, explore the dynamics shaping voter behavior, and highlight what to watch as the next election cycle unfolds.
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OUTLOOK (all times Eastern)
Sunday
OPEC+ ministers meet to set September oil production targets.
Monday
Canada’s financial markets closed for Civic Holiday, sans Quebec
Court hearing of a 12 states’ lawsuit to stop the proposed Paramount Skydance/Warner Brothers Discovery merger.
Tuesday
Primary elections in Kansas, Michigan, Missouri, and Washington states.
9:00a.m., the Senate Judiciary Committee set to continue the nomination hearing of Todd Blanche to be US Attorney General.
7:50p.m., release of BoJ June meeting minutes.
8:15p.m., Kansas City Fed Bank’s Schmid keynotes the institution’s annual Agricultural Economic Summit.
Wednesday
Central banks of Brazil and India announce rates decisions.
10:00a.m., Senate Finance Committee members explore process options for addressing Social Security solvency.
4:05p.m., Fed Governor Cook discusses the economic outlook at the Anchorage Economic Development Corporation 2026 Economic Luncheon.
8:35p.m., San Francisco Fed Bank’s Daly keynotes the Economic and Social Research Institute (ESRI) International Conference in Tokyo.
Thursday
Tennessee primary elections
5:30p.m., St. Louis Fed Bank’s Musalem deliver remarks and participates in a moderated discussion at the Center for Public Policy Debate, São Paulo. [This scheduled appearance follows an interesting FT interview published late Friday ET. One mildly provocative or just revealing line: “Congress gave the FOMC the responsibility to achieve price stability and full employment. It did not give that responsibility to markets.” (HERE)
Friday
8:30a.m., US payroll reports
10:00a.m., Richmond Fed Bank’s Barkin engages fireside chat on the economy, leadership and the evolving role of the Federal Reserve at a National Association for Business Economics, Washington DC.
