Fed: All eyes on Jackson Hole. The July FOMC minutes highlighted a divided Committee, with a 9-3 vote to hold rates at 3.5%-3.75% and several officials favoring a hike if inflation remains persistent. Inflation risks remain highly uncertain, while recent softer activity and labor-market data have reduced market expectations for a September hike. Against this backdrop, Chair Warsh's Jackson Hole speech will be closely watched for clarification of the Fed's reaction function and inflation objective. Treasury Secretary Bessent's announcement that long-dated Treasury buybacks will at least double could provide some support to the long end, although the impact may be limited. Meanwhile, Musalem linked elevated yields to government borrowing and AI-related capital demand, while Kashkari argued that Treasury market functioning remains sound.

ECB: Policy remains data-dependent. Olli Rehn stressed the importance of keeping inflation expectations anchored, while Martins Kazaks said the ECB is well positioned to act if inflation remains uncomfortably high, noting both the resilience of the economy and the pros and cons of further hikes. In contrast, Piero Cipollone cautioned against excessive tightening following supply shocks, highlighting the risk to growth. The September meeting therefore remains finely balanced.

SNB: Negative rates remain an option. Petra Tschudin said the SNB would be prepared to cut rates below zero if necessary to keep inflation within its 0%-2% target range. With inflation at just 0.4%, the easing bias remains clear, although the SNB continues to avoid forward guidance given Switzerland's exposure to external shocks.

Credit

Corporate credit weakened modestly last week as higher Treasury yields pressured US spreads. US IG spreads widened 1bp to 80bp, while US HY spreads widened 3bp. CDX IG also widened 0.8bp to 51.5bp. US IG yields rose 5bp to 5.47%, alongside a 4bp increase in the 10Y Treasury yield. The 30Y briefly reached 5.31%-5.33%, its highest level since 2007. Treasury buybacks triggered a temporary rally, but yields subsequently remained elevated.

Fund flows into USD IG remained positive but moderated, with $4.9bn of inflows versus $7.28bn the previous week. US IG primary issuance reached $21bn, while activity is expected to remain muted before a broader pickup in early September. Alphabet's inaugural AUD 5.5bn six-tranche bond also highlighted concerns around the impact of US hyperscaler supply on regional credit markets.

European credit was more resilient, with IG and HY spreads unchanged over the week.

SoftBank was a notable development in Japan. The company announced a JPY 1trn seven-year retail bond, with a coupon range of 4.30%-4.90%, its largest-ever retail corporate bond offering. Around 40% of proceeds will refinance approximately JPY 400bn of retail bonds maturing in September, while a further JPY 100bn institutional maturity has already been refinanced. Although the higher funding cost and additional debt are credit negative, the transaction confirms SoftBank's strong domestic funding capabilities and should extend its maturity profile. SoftBank is also expected to maintain LTV below its 25% target threshold.