Weekly Market Outlook 8/17/2025
A little bit of inflation in my life. A little bit of growth scare by my side. A little bit of 50bps cut is all I need...
Hello traders,
Hope you all had a great weekend and some much needed time away from screens.
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But first, a brief recap of last week’s ideas.
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Tariff Truce Here, Tariff Deal There: Markets Start the Week With Trade Politics Up Front
A 90-day extension of the U.S.–China tariff truce and a fresh U.S.–EU tariff deal set the tone as traders face Fed minutes, Jackson Hole, and a Zelensky visit to Washington. The near-term map for equity index futures, crude, and bitcoin runs through trade politics, supply calendars, and a hot producer-price print that just pushed rate-cut odds back toward one-and-done.
The White House extended the China tariff suspension for another 90 days, averting a jump to triple-digit duties and keeping a 10 percent “interim” line in place while talks continue. The administration framed it through a pair of executive actions and a joint statement that together suspend 24 percentage points of the previously announced rate through November 10. Markets read the move as time bought rather than peace made.
In parallel, Washington and Brussels unveiled a tariff arrangement that lowers or eliminates duties on a wide basket of goods and sets a 50 percent tariff on certain steel and aluminum imports, with an average 15 percent rate across many categories. The fact sheet sells it as an inflation and supply-chain relief valve for U.S. consumers and exporters, with Brussels flagging its own implementation path.
The Week’s Macro Spine
Calendar and policy signals
The minutes of the July 29–30 FOMC meeting hit Wednesday at 2 p.m. Eastern. The Fed’s schedule confirms the release and the cadence is standard. The market will hunt for split views on growth risks, tariff pass-through, and the bar for September action.
Jackson Hole begins Thursday under the Kansas City Fed’s banner. The official program points to “policy frameworks and inflation dynamics” as the frame. Powell will face questions about how a hot PPI sits next to cooler CPI, and how much of July’s wholesale surge reflects tariff and supply friction.
High-frequency data skews to Thursday. Jobless claims, Philly Fed, and S&P Global flash PMIs arrive in a tight window. Existing home sales print at 10 a.m. Eastern the same day, per NAR’s release schedule. Macro previews from S&P Global and Kiplinger cluster the week’s hits in a way consistent with risk-on if the soft data cooperate.
Treasury supply is front-loaded. The auction calendar shows 13- and 26-week bills Monday and a stream of coupons midweek. Pair that with the 10-year at roughly 4.29 percent into the weekend and a VIX closing near 14.8, and you have a market still priced for benign outcomes while absorbing a busy tape.
Inflation split: cool CPI, hot PPI
CPI for July rose 0.2 percent month over month and 2.7 percent year over year, with shelter up 0.2 percent and energy down 1.1 percent. That was the “good” print. Two days later PPI jumped 0.9 percent on the month and 3.3 percent on the year, with core trade services margins and goods both firm. The juxtaposition is simple: consumer prices are behaving, producer prices just reminded everyone that pass-through risk is not dead.
Market commentary from Reuters and the Journal leaned the same way. The PPI spike dented hopes for a larger September cut and nudged front-end yields higher, even as the 10-year stayed in a 4.2 to 4.35 zone. That mix leaves equity duration sensitive to every line of the FOMC minutes and to Powell’s phrasing in Wyoming.
Geopolitics on the docket: Ukraine, Israel, Red Sea
President Zelensky visits Washington on Monday for meetings at the White House, with expectations centered on support and the tenor of U.S. diplomacy ahead of Trump–Putin talks in Alaska. This is not a paper exercise. Markets have been pricing in some probability of de-escalation headlines. A miss there can move crude and defense-heavy subsectors.
In the Middle East, Israel said it struck an energy facility used by Yemen’s Iran-aligned Houthi group near Sanaa on Sunday, citing repeated missile and drone attacks. That follows weeks of renewed threats to shipping and several warnings from maritime security channels. Energy traders care because the Red Sea risk premium can toggle refined product spreads and freight.
The Market
Equity Index Futures: ES and NQ
Where we are. September E-mini S&P 500 futures settled around 6,467 on Friday. September E-mini Nasdaq-100 closed near 23,804. Both softened into the weekend as traders faded the PPI shock and pre-positioned for minutes plus Jackson Hole. Intraday ranges were orderly, consistent with a sub-15 spot VIX and term structure that still slopes up into the fall.
Tape feel. ES continues to trade as a function of two opposing forces: falling real-time recession probability and stickier corporate margin risk if producer costs bleed through. NQ adds a third lever in chip and AI cyclicals. The Friday drift lower tracked a weak services-hardware tape and an options market that has been selling weeklies into low realized volatility. None of that breaks trend, but it removes the easy upside.
Levels and flows. ES faces first resistance at last week’s high cluster just above 6,500 on the September contract, with support in the 6,420 to 6,440 zone where buyers showed up twice late week. NQ’s focal band is 23,700 to 24,000, with supply reappearing near 24,200. Futures boards from CME, Barchart, and MarketWatch triangulate those prints.
Macro link. If the minutes read as divided and Powell leans balanced, equity duration can live with 10-year yields around 4.3 percent. A hawkish tilt plus any tariff shock headline would push ES toward the lower end of its recent range. The opposite pairing could squeeze shorts toward 6,550 to 6,580.
Risk monitor. Watch VIX futures settlements and the 3-month VIX index for signs of hedging demand. Last week’s data show front-month VIX in the mid-15s and VXV about 18.5. That is not stress. It is complacency by another name.
Bitcoin
State of play. Bitcoin traded around 117,700 into the weekend after an early-month push above 120,000. ETF flow data show renewed net inflows after a choppy start to August, with CoinShares logging roughly 260 million into bitcoin-linked products last week and external trackers showing fresh daily inflows into BlackRock’s IBIT.
Policy link. The tariff truce takes some heat out of broad risk assets, which tends to support crypto via dollar softness. The bigger swing factor is Fed tone. A calm Powell plus no shock in the minutes is usually bullish for high beta, especially with headline inflows and 401(k) access chatter in the background. Recent media coverage argues that retirement-channel adoption and regulatory momentum are now part of the story. Treat those as sentiment supports, not fundamentals.
Levels. Immediate support sits in the 110,000 to 112,000 zone that held twice in July and early August. Resistance is the round 120,000 to 123,000 area. Above that, momentum can carry, but only if ETF flows stay positive and macro stays benign.
Vol and structure. Implied vol has been trending lower since the mid-July spike, consistent with futures basis that remains positive yet tighter than spring. If Powell disappoints doves, crypto can reprice faster than equities.
Crude Oil
Prices and term. Brent settled near 66 dollars Friday, with WTI just under 63. The IEA and EIA both leaned bearish in recent outlooks, citing supply growth and seasonal demand fades. Term structure has narrowed across Brent and WTI, signaling less tightness.
Geopolitics. Trump–Putin talks in Alaska hover over the complex. Sellers pressed crude into the meeting, on the view that any steps toward a Ukraine ceasefire or softer sanctions regime would lift barrels and lower prices. Israel’s reported strike on a Houthi-linked power site argues the other way for risk premia, but the tape priced it as localized. Net effect so far is drift with spikes on headline risk.
Fundamentals. Banks moved forecasts toward mid-60s Brent for H2. Morgan Stanley and Barclays both flagged OPEC+ supply normalization and non-OPEC growth, while Goldman held a mid-60s average with scenario tails. Read these as guidance for drift rather than anchors. When policy headlines hit, positioning matters more.
Levels. For WTI, 62 to 64 is the tactical box. For Brent, 65 to 67. Breaks usually need either hard macro data or a geopolitics surprise.
The Trade Ideas
Not investment advice. Sizing, margin, and liquidity discipline are mandatory.
ES, September contract
1) Range-fade with risk switch
Thesis: Minutes signal a split committee. Powell threads the needle at Jackson Hole. Yields stay anchored around 4.3 percent. ES oscillates 6,420 to 6,520 absent a shock.
Setup: Sell 6,520s to 6,540s strength with a hard stop at 6,585, target 6,455. Flip long 6,430 to 6,440 with a stop at 6,395, target 6,505. Confirm with VIX holding sub-16 on the fade and term structure in contango.
Risk: PPI pass-through narrative snowballs into the minutes and Powell. A single hawkish line breaks the range.
2) Event-skew via options
Thesis: Implied is underpricing Jackson Hole speech risk.
Setup: Buy Friday-expiry ES 0.5 percent out-of-the-money strangles when implied dips toward the 20th percentile of 1-week distribution. Target a 2.0x premium if realized pops on Friday headlines. Use VIX and VXV gap as trigger guardrails.
Risk: A nothingburger speech bleeds theta.
NQ, September contract
3) Tactical long on dovish-lean minutes
Thesis: If the minutes show a solid minority favoring an earlier cut and Powell is neutral, growth duration benefits.
Trigger: NQ reclaims 24,000 after the minutes with advancing breadth.
Entry: 24,030 to 24,080 on a 15-minute close. Stop: 23,720. Target: 24,420, then 24,650.
Evidence: Futures boards validate the 23,700 to 24,200 band as the operative range.
Risk: A chip-cycle downgrade or tariff headline that hits semis specifically.
4) Relative value: NQ over ES on benign Powell
Thesis: If Powell skews balanced and the 10-year holds near 4.3, beta rotation favors NQ.
Setup: Long NQ vs short ES at a 3.68 ratio, risk 1 percent on the spread, target a 1.5 percent move.
Risk: Any renewed PPI-to-CPI pass-through narrative. Ratio stops only.
Bitcoin
5) Buy the dip to flow
Thesis: ETF inflows remain positive week-over-week. The tariff truce keeps the dollar softer at the margin. Minutes that avoid hawkish landmines plus a calm Powell support a retest of 120,000 to 123,000.
Entry: 114,500 to 115,500 zone, stop 111,900, targets 120,800 then 123,200.
Risk: A hot PMI-prices component or Powell hinting that September is off. Crypto draws down faster than equities when macro turns.
6) Hedge the upside tail
Thesis: If Zelensky meetings disappoint and energy spikes, bitcoin can catch a safe-haven bid alongside gold.
Setup: Small call spread, two-to-one financed, strikes 122,000 by 128,000 with one-week tenor. Exit on a 1.8x premium.
Risk: No geopolitics impulse. Theta decay.
Crude
7) Fade strength into mid-60s Brent
Thesis: Macro and agency balances point to a heavy tape near 66 to 67, barring fresh supply disruption. EIA and IEA tone backs that.
Setup: Short prompt WTI 63.80 to 64.20 with stop 64.95, target 62.20. Alternatively sell a Brent call spread at 67 by 70 for the week.
Risk: Any sanctions shift from Trump–Putin, any Houthi attack that demonstrably cuts throughput.
8) Calendar spread for carry
Thesis: Narrowing backwardation reduces the reward to long nearby. If spreads test flat, structure can flip.
Setup: Short Oct-Dec WTI spread on strength toward recent highs, target a 30 to 40 cent compression.
Risk: A sudden supply outage.
What Moves What This Week
Trade policy
U.S.–China truce extension. The 90-day extension is an anti-shock more than a stimulus. It removes tail risk of a sudden jump in headline inflation from import taxes. Equities like it. It does not fix the PPI surge that just printed. Energy likes the demand signal at the margin.
U.S.–EU tariff package. The metals line matters for specific producers and for downstream pricing. The average 15 percent rate language is political packaging, but the net is lower friction for a swath of goods and some discipline on carbon outside the U.S. tax code. Equities and supply chains benefit.
The Fed
Minutes. Expect a split read. The July statement was bland by design. The minutes will show how many wanted to tee up September. The market has migrated toward a smaller single cut probability after PPI. The 2s10s slope improved to roughly +55 bps by Thursday, which supports equity duration as long as the front end does not lurch up.
Jackson Hole. Powell has a path to patience. Any hint that tariffs or producer costs are complicating disinflation will be treated as hawkish even if the words are neutral.
Supply
Auctions. Bills and coupons arrive into a 10-year at about 4.29 percent. If bid-to-cover holds, equity bulls will take that as a check on term premia. If not, ES will feel it through multiple compression.
Geopolitics
Zelensky in Washington. The White House calendar shows the Monday meeting. Any statement that points to a ceasefire track will pressure crude and defense winners and can lift rate-cut hopes via the inflation channel. A stall does the opposite.
Red Sea and Yemen. Israel’s reported strike on a Houthi-linked site is a reminder that shipping lanes remain a risk. Freight and refined products move first. If traffic interruptions pile up, Brent’s downside narrows.
Asset-by-Asset Details
ES: What would change the base case
Hawkish minutes plus hawkish Powell. A sentence that reads as “higher for longer because producer costs are re-accelerating” could take ES to the low 6,400s quickly.
Soft PMIs. A downside surprise in services new orders or prices index helps duration and the long NQ over ES spread.
Tariff shock. Any reversal of the China pause before November is a volatility event. Odds are low this week given the signed extension.
NQ: What could add fuel
Retail earnings tone. If big-box guides do not blame tariffs for margin pressure, the market infers less pass-through risk. That helps growth multiples into Jackson Hole.
Semis noise. A single vendor warning can cap upside. Watch chip equipment names around China exposure, which Reuters flagged last week.
Bitcoin: What matters beyond ETF flows
Dollar and rates. A steady 10-year and softer dollar are favorable. A dollar spike on hawkish minutes hurts.
Policy narratives. Coverage tying retirement accounts and spot ETF scale to mainstreaming continues. Use flows, not headlines, as the signal.
Crude: What breaks the 62 to 67 range
Supply event. Any shipping outage that removes paper tightness and becomes physical interruption.
OPEC+ signals. The market expects phased supply increases and discipline. A surprise cut is not the base case. Banks’ mid-60s forecasts bracket expectations.
Ukraine talks. Any movement toward a ceasefire or sanction relief pushes prices down first, then forces a reassessment if demand picks up.
Bond Yields and Cross-Asset
The 10-year at roughly 4.29 and the VIX under 15 say the market expects the Fed to talk rather than act. The slope of 2s10s near +55 bps argues the recession scare has faded, at least in market prices. That leaves equities and crypto more sensitive to policy words and to trade headlines than to data. If claims and PMIs land near consensus, duration stays boring and risk can grind.
WEEKLY LEVELS:
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