Feb 2026 emerges as real lever if Trump is successful in firing Cook

EU mid-market update: Mixed start for Europe; Nvidia to report after US close; China's AI chipmaker Cambricon briefly becomes its most valuable stock; French stability in question; Feb 2026 emerges as real lever if Trump is successful in firing Cook.

Notes/observations

- German consumer confidence dropped to -23.6 for September, signaling weak household spending and limited recovery prospects.

- 10-year gilt yield slips <4.72% after hitting 3-month high; Markets price 41% chance of BOE cut this year following Mann’s comments.

- Commerzbank warned euro could fall as French government faces confidence vote over deficit cuts, noting eurozone debt and ECB easing risks seen as negative; JPMorgan analysts say French banks may face extended tax surcharges, pressuring earnings.

- France cannot mimic Berlin or Washington-style stimulus because EU rules now impose a legally binding medium-term path, France is already in an Excessive Deficit Procedure with tight net-expenditure caps, the ECB’s backstop is conditional on compliance, and a high starting deficit and debt plus widening OAT-Bund spreads and a hung Assembly make any announce-and-spend push costlier and riskier.

- Trump’s dismissal of Fed Gov Cook raises politicization concerns; US dollar index has limited reaction as Cook challenges decision; More analysts point to real lever is February 2026, when all 12 Reserve Bank presidents face synchronized reappointment requiring Board approval; Fed futures now pricing ~25% chance (v <20% w/w) that Fed cuts rates by 150bps by Sept 2026; Fed’s Waller to speak tomorrow on economic outlook.

- Ahead of NVDA results tonight, China AI chipmaker Cambricon was getting wider attention as it briefly overtook Moutai as China’s most valuable stock; One of its key features include rolling out a simple, end-to-end software toolkit much like Nvidia’s CUDA so Chinese companies can run popular AI models on homegrown hardware at scale. Its big bet is “edge” AI, pairing the processor with built-in flash storage to speed up large language models on devices and private servers, which could lower costs and reduce reliance on foreign clouds and tools.

- Gold fell 0.2% but holds weekly gains; Safe-haven demand stays firm on Fed independence concerns and dovish Powell outlook.

- Crude down 0.3% while traders watch Ukraine talks and US tariffs on Indian Russian oil imports.

- Bitcoin drops after whale selling, retreats from Aug record high.

- Spacex’s 10th test flight for Starship succeeded after recent setbacks; Had its first payload deployment with dummy satellites and hit milestone by relighting one of the ship's engines in space - critical component for a controlled reentry.

- Asia closed mixed with Shanghai Composite underperforming -1.8%. EU indices -0.5% to +0.3%. US futures 0.0%. Gold -0.3%, DXY +0.4%; Commodity: Brent -0.4%, WTI -0.3%; Crypto: BTC +0.6%, ETH +4.0%.

Asia

- South Korea Aug Manufacturing Business Survey: 93.3 v 91.9 prior.

- Australia July Westpac Leading Index M/M: +0.14% v -0.03% prior.

- China July Industrial Profits Y/Y: -1.5% v -4.3% prior.

- Australia July CPI Y/Y: 2.8% v 1.9% prior; CPI Trimmed Mean Y/Y: 2.7% v 2.1% prior; likely the RBA will look through this spike, much of July’s jump reflects temporary policy effects.

- South Korea July Retail Sales Y/Y: 9.1% v 7.3%e; Department Store Sales Y/Y: No est v -0.9% prior.

- China Commerce Ministry stated that would announce new policies in September aimed at boosting services consumption.

- China said to be increasing bond issuance to drive economic growth.

Global conflict/tensions

- US Special envoy Witkoff noted US was holding meetings this week on the conflicts in Ukraine, Iran, and Israel-Hamas, with the goal of resolving them before year-end.

Americas

- Pres Trump said to consider White House Econ Adviser Stephen Miran and former World Bank Pres David Malpass as potential replacements for Lisa Cook on Fed Board.

- Senate Panel set to hold hearing next week on Fed nominee Stephen Miran.

- Trump administration said to be exploring ways to expand its influence over the Federal Reserve’s 12 regional banks. Goal being to scrutinize how regional presidents are vetted and chosen, as they are not Senate-confirmed.

- Treasury Sec Bessent noted that tariff revenues were running at record levels and could approach $1.0T. Believe we'll see tariff rev jump in Sept.

- Bank of Canada (BOC) Gov Macklem stated that not revisiting 2% inflation target.

Trade

- President Trump stated that expected to resolve the Ukraine conflict through sanctions or tariffs, warning of “very serious” consequences for Russia.

- President Trump's doubling of India tariffs to 50% went into effect, as expected.

Energy

- Weekly API Crude Oil Inventories: -1.0M v -2.4M prior.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.09% at 553.72, FTSE +0.04% at 9,269.09, DAX -0.64% at 24,024.47, CAC-40 0.00% at 7,709.98, IBEX-35 -0.47% at 15,010.59, FTSE MIB -0.88% at 42,281.00, SMI +0.07% at 12,170.62, S&P 500 Futures -0.04%].

Market focal points/key themes: European indices opened green across the board; among sectors leading the way higher are energy and industrials; lagging sectors include consumer discretionary and telecom; earnings expected in the upcoming US session include Kohl’s, JM Smucker and WIlliams-Sonoma.

Equities

- Consumer discretionary: JD Sports Fashion [JD.UK] +4.0% (trading update; buyback; continue to assess the potential impacts from US tariffs), Dalata Hotel [DHG.IT] -5.0% (earnings).

- Financials: Deutsche Bank [DBK.DE] -2.5%, Commerzbank [CBK.DE] -2.5% (analyst downgrade), Prudential [PRU.UK] -0.5% (earnings).

- Industrials: Kendrion [KENDR.NL] +9.0% (earnings; divestment) - Technology: SAP [SAP.DE] -0.5% (MongoDB, Box, Okta and nCino results).

- Materials: Norsk Hydro [NHY.NO] -0.5% (EU moves to 'shield' aluminum from being impacted by US tariffs), Givaudan [GIVN.CH] -0.5% (CEO to retire).

Speakers

- SNB's Martin stated that was not risk of deflationary development; The bar was higher for the SNB to move interest rates into negative territory than it would be to cut rates if they were still above zero.

- Ukraine President Zelenskiy stated that Russia was sending negative signals regards meetings and further developments. Time to organize discussions on priorities and timeline of security guarantees.

Currencies/fixed income

- USD was steady to slightly higher in another quiet EU session but Fed independence concerns continued to linger.

- EUR/USD moved below the 1.16 level but contained within the summer trading range of 1.15-1.20.

- GBP/USD at 1.3430 area by mid-session.

- USD/JPY approaching the 148 area.

- 10-year German Bund yield at 2.70% and 10-year Gilt yield at 4.72% 10-year Treasury yield: 4.26%.

Economic data

- (FI) Finland Aug Consumer Confidence: -7.6 v -6.4 prior; Business Confidence: -1 v -6 prior.

- (DE) Germany Sept GfK Consumer Confidence: -23.6 v -21.4e- (SE) Sweden July Household Lending Y/Y: 2.6% v 2.4% prior.

- (DK) Denmark July Retail Sales M/M: +0.6% v -0.7% prior; Y/Y: 2.7% v 1.3% prior.

- (NO) Norway July Trend Unemployment Rate: 4.6% v 4.6% prior.

- (HU) Hungary Jun Average Gross Wages Y/Y: 9.7% v 8.3%e.

- (ES) Spain Jun Total Mortgage Lending Y/Y: 45.7% v 48.8% prior; House Mortgage Approvals Y/Y: 31.7% v 54.4% prior.

- (AT) Austria Aug Manufacturing PMI: 49.1 v 48.2 prior.

- (CH) Swiss Aug Expectations Survey: -53.8 v +2.4 prior.

Fixed income issuance

- (UK) DMO sold £5.0B in 4.375% Mar 2028 Gilts; Avg Yield: 3.991% v 3.941% prior; bid-to-cover: 3.16x v 3.71x prior; Tail: 0.2bps v 0.2bps prior.

- (SE) Sweden sold total SEK6.0B vs. SEK6.0B indicated in 2035 and 2036 bonds.

- (IT) Italy Debt Agency (Tesoro) sold €3.0B vs. €3.0B indicated in 6-month bills; Avg Yield: 2.012% v 1.993% prior; Bid-to-cover: 1.66x v 1.48x prior.

Looking ahead

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (DE) Germany to sell €4.0B in new Nov 2032 Bunds.

- 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays).

- 06:00 (UK) Aug CBI Retailing Reported Sales: No est v -34 prior; Total Distribution reported Sales: No est v -39 prior.

- 06:00 (RU) Russia to sell OFZ Bonds.

- 06:00 (CZ) Czech Republic to sell combined CZK10.0B in 2031, 2034 and 2044 Bonds.

- 07:00 (US) MBA Mortgage Applications w/e Aug 22nd: No est v -1.4% prior.

- 07:00 (UK) Weekly PM Question time in House.

- 07:30 (BR) Brazil July Total Outstanding Loans (MXN): No est v 6.686T prior; Outstanding Loans M/M: No est v 0.5% prior; Personal Loan Default Rate: No est v 6.3% prior.

- 08:00 (MX) Mexico July Trade Balance: $0.8Be v $0.5B prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 10:30 (US) Weekly DOE Oil Inventories.

- 11:30 (US) Treasury to sell 2-Year FRN Reopening.

- 11:30 (US) Treasury to sell 17-Week Bills.

- 11:45 (US) Fed's Barkin on economy.

- 12:00 (RU) Russia July Real Retail Sales Y/Y: 1.3%e v 1.2% prior.

- 12:00 (RU) Russia July Unemployment Rate: 2.3%e v 2.2% prior; Jun Real Wages Y/Y: 4.3%e v 4.2% prior.

- 12:00 (RU) Russia July Industrial Production Y/Y: 1.5%e v 2.0% prior.

- 12:00 (CA) Canada to sell 10-year Bonds.

- 13:00 (US) Treasury to sell 5-Year Notes.

- 13:30 (BR) Brazil July Total Formal Job Creation: +136.2Ke v +166.6K prior.

- 13:30 (BR) Brazil July Total Federal Debt: No est v 7.883T prior.

- 14:30 (MX) Mexico Central Bank (Banxico) Quarterly Inflation Report.

- (CO) Colombia July Retail Confidence: No est v 24 prior; Industrial Confidence: No est v 1.5 prior.

- 18:00 (HU) Hungary Aug Business Confidence: No est v -14.8 prior; Consumer Confidence: No est v -31.6 prior; Economic Sentiment: No est v -19.2 prior.

- 18:45 (NZ) New Zealand July Filled Jobs M/M: No est v 0.1% prior.

- 21:00 (KR) Bank of Korea (BOK) Interest Rate Decision: Expected to leave 7-Day Repo Rate unchanged at 2.50%.

- 21:00 (NZ) New Zealand Aug ANZ Business Confidence: No est v 47.8 prior; Activity Outlook: No est v 40.6 prior.

- 21:30 (AU) Australia Q2 Private Capital Expenditure: No est v -0.1% prior.

- 21:30 (JP) BOJ Board Nakagawa speech in Yamaguchi.

- 23:35 (JP) Japan to sell new 2-year JGB Bonds.