FOMC begins meeting with Lisa cook participating after appeals court declines Trump request

Notes/observations

- Broad US dollar weakness continues as FOMC kicks off its two day meeting, expected to cut rates by 25bps tomorrow. Risk appetite has been spurred as market expects some votes for 50bps from some Fed members. Multiple reductions expected through 2027. Trade optimism from US-China talks has given tailwinds to bulls.

- UK gilt yields are relatively steady as jobs data was mostly in line. Unemployment held at 4.7%, weekly earnings ticked one tenth higher to 4.7% and jobless claims increased by 17.4K. BOE consensus unhanged for Thurs, expected to keep rates on hold still and consider reducing QT to £60B. Sterling move higher is likely attributed to USD weakness. Politically, PM Starmer faces pressure after more resignations in the Labour party. More defects from Tory party to right leaning Reform party amid public protests over weekend about illegal immigration.

- Trump begins UK state visit. Summary of schedule: 16th - arrives, 17th - meets several royals amid public protests, 18th - bilateral meeting with PM Starmer to talk trade deals, tech collabs and nuclear partnerships, then departs.

- Notable EU Corp News: Trustpilot shares rose 10% to £2.20 on strong H1 results and solid revenue momentum, with mid-teens booking growth, enterprise segment expanding rapidly, margins improving; major customer wins include Barclays, Boots, Amundi, Lindt, and Experian.

- Asia closed mixed with KOSPI outperforming +1.2%. EU indices lower -0.6% to -0.2%. US futures +0.1-0.4%. Gold +0.4%, DXY -0.3%; Commodity: Brent -0.6%, WTI -0.6%; Crypto: BTC +0.7%, ETH -0.3%.

Asia

- South Korea Aug Export Price Index M/M: 0.3% v 0.8% prior; Y/Y: -1.0% v -4.5% prior.

- South Korea Aug Import Price Index M/M: 0.3% v 0.8% prior; Y/Y: -2.2% v -5.9% prior.

- New Zealand Aug Food Prices M/M: 0.3% v 0.7% prior.

- RBA Assist Gov (Econ) Hunter: Close to getting inflation to target.

Global conflict/tensions

- Treasury Sec Bessent stated that US would not impose tariffs on Chinese goods for purchasing oil unless European countries did the same; US said to be willing to consider stronger sanctions on Russia oil and on oil companies, possibly freezing additional Russian assets.

Americas

- US Appeals Court declines to allow Trump Administration/DOJ request to remove Lisa Cook from Fed.

- Pres Trump Fed Board Nominee Miran clears US Senate procedural, as expected.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.1% at 556, FTSE -0.2% at 9255, DAX -0.3% at 23678, CAC-40 0.0% at 7895, IBEX-35 -0.6% at 15298, FTSE MIB -0.1% at 4207, SMI -0.1% at 12137, S&P 500 Futures +0.2%].

Market Focal Points/Key Themes: European indices opened generally higher; markets seen in holding pattern ahead of risk events later in the week; among outperforming sectors technology and industrials; underperforming sectors include financials and materials; Wendel sells 23.3M in Bureau Veritas shares; focus on US retail sales data to be released later in the day; no major earnings expected in the upcoming Americas session.

Equities

- Consumer discretionary: Trustpilot [TRST.UK] +9.5% (H1 results, CFO steps down, new £30M buyback); - Easyjet [EZJ.UK] -2.5% (analyst downgrade).

- Consumer staples: Beiersdorf [BEI.DE] -1.5% (analyst downgrade); Danone [BN.FR] +0.5% (analyst upgrade).

- Industrials: Randstad [RAND.NL] -1.5% (analyst downgrade); Schindler Holding [SCHP.CH] -2.5% (investor sells ~600,000 registered shares in accelerated book building deal.

- Technology: VusionGroup [VU.FR] +15.0% (analyst upgrade, final H1 results).

Speakers

- ECB's Villeroy (France) noted that French growth remained positive but not strong enough. Had to address the debt problem and could do it; needed to reign in spending and raises taxes.

- ECB's Kazaks (Latvia): Reduction in ECB rates already very significant; no reason to cut further at this time.

- Germany Chancellor Merz: To introduce incentives for more work, and less use of medical and social services.

- EU 19th sanction package against Russia said to be postponed and to be aligned with G7 priorities.

- Poland Fin Min Domanski noted that CPI in the coming months will be ~3% y/y.

- US Sec of State Rubio: Trump could meet Ukraine Zelenskiy in New York next week to discuss Russia-Ukraine peace talks.

- Thailand Central Bank (BOT) outgoing Gov Sethaput commented that the country needed structural reforms; current policy rate level was appropriate for economy; BOT was not behind the curve on rates.

Currencies/fixed income

- USD Index at a 2-month low around 97.10 as market expectations rise of a faster pace of policy easing from the Fed coupled with improved risk appetite.

- EUR/USD probing the 1.18 level as more ECB members express the view of steady rates for the time being.

- GBP/USD at 1.3645 with focus on Thurs BOE rate decisions. UK jobs data did little to alter the Bank of England's cautious stance and seen keeping policy steady later this week.

- USD/JPY below the 147 level as markets analyze the upcoming LDP leadership vote and fiscal/monetary complications.

- 10-year German Bund yield at 2.68% and 10-year Gilt yield at 4.63% 10-year Treasury yield: 4.03%.

Economic data

- (UK) Aug Jobless Claims Change: +17.4K v -33.3K prior; Claimant Count Rate: 4.4% v 4.3% prior; Payrolled Employees Monthly Change: -8K v -12Ke.

- (UK) July Average Weekly Earnings 3M/Y:4.7 % v 4.7%e; Weekly Earnings (ex-Bonus) 3M/Y: 4.8% v 4.8%e.

- (UK) July ILO Unemployment Rate: 4.7% v 4.7%e; Employment Change 3M/3M: +232K v +220Ke.

- (HU) Hungary July Average Gross Wages Y/Y: 8.9% v 9.3%e.

- (ES) Spain Q2 Labour Costs Y/Y: 3.0% v 3.8% prior.

- (CZ) Czech Aug PPI Industrial M/M: 0.0% v -0.1%e; Y/Y: -0.8% v -0.9%e.

- (IT) Italy Aug Final CPI M/M: 0.1% v 0.1% prelim; Y/Y: 1.6% v 1.6% prelim.

- (IT) Italy Aug Final CPI EU Harmonized M/M: -0.2%t v -0.2% prelim; Y/Y: 1.6% v 1.7% prelim; CPI Index (ex-tobacco): # v 121.8 prior.

- (HK) Hong Kong Aug Unemployment Rate: 3.7% v 3.8%e.

- (DE) Germany Sept ZEW Current Situation Survey: -76.4 v -74.0e; Expectations Survey: 37.3 v 26.3e.

- (EU) Euro Zone Sept ZEW Expectations Survey: 26.1 v 25.1 prior.

- (EU) Euro Zone July Industrial Production M/M: 0.3% v +0.4%e; Y/Y: 1.8% v 1.8%e.

- (EU) Euro Zone Q2 Labour Costs Y/Y: 3.6% v 3.4% prior.

Fixed income issuance

- (UK) DMO sold £3.0B in 4.375% Jan2040 Gilts; Avg Yield: 5.048% v 5.066% prior; bid-to-cover: 2.95x v 3.69x prior; Tail: 0.9bps v 0.1bps prior.

- (CH) Switzerland sold CHF439.8M in 3-month Bills; Avg Yield: -0.115% v -0.111% prior; bid-to-cover: 4.99x v 4.72x prior.

- (ZA) South Africa sold total ZAR3.75B vs. ZAR3.75B indicated in 2037, 2040 and 2048 bonds.

Looking ahead

- 05:25 (EU) Daily ECB Liquidity Stats.
05:30 (DE) Germany to sell €4.5B in 2.2% Oct 2030 BOBL.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).

- 05:40 (UK) BOE allotment in 6-month GBP-enhanced liquidity repo operation (ILTR).

- 06:00 (IL) Israel Q2 Preliminary GDP (2nd reading) Y/Y: No est v -3.5% advance.

- 06:00 (FI) Finland to sell combined €1.5B in 2031 and 2035 RFGB Bonds.

- 06:30 (EU) ESM to sell €1.1B in 6-month Bills.

- 06:30 (TR) Turkey to sell Bonds.

- 07:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 07:00 (ES) Bank of Spain (BOS) updates economic outlook.

- 08:00 (PL) Poland Aug CPI Core M/M: 0.1%e v 0.3% prior; Y/Y: 3.1%e v 3.3% prior.

- 08:00 (BR) Brazil July National Unemployment Rate: 5.7%e v 5.8% prior.

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

- 08:15 (CA) Canada Aug Annualized Housing Starts: 280.0Ke v 294.1K prior.

- 08:30 (US) Aug Advance Retail Sales M/M: 0.3%e v 0.5% prior; Retail Sales (ex-auto) M/M: 0.4%e v 0.3% prior; Retail Sales (ex-auto/gas): 0.5%e v 0.2% prior; Retail Sales (control group): 0.4%e v 0.5% prior.

- 08:30 (US) Aug Import Price Index M/M: -0.2%e v +0.4% prior; Y/Y: 0.0%e v -0.2% prior; Import Price Index (ex-petroleum) M/M: 0.1%e v 0.3% prior.

- 08:30 (US) Aug Export Price Index M/M: -0.1%e v +0.1% prior; Y/Y: No est v 2.2% prior.

- 08:30 (US) Sept New York Fed Services Business Activity: No est v -11.7 prior.

- 08:30 (CA) Canada Aug CPI M/M: 0.1%e v 0.3% prior; Y/Y: 2.0%e v 1.7% prior; Core-Median Y/Y: 3.1%e v 3.1% prior; Core-Trim Y/Y: 3.0%et v 3.0% prior; Consumer Price Index: No est v 164.9 prior.

- 08:55 (US) Weekly Redbook LFL Sales data.

- 09:15 (US) Aug Industrial Production M/M: -0.1%e v -0.1% prior; Manufacturing Production M/M: -0.3%e v 0.0% prior; Capacity Utilization: 77.4%e v 77.5% prior.

- 10:00 (US) Sept NAHB Housing Market Index: 33e v 32 prior.

- 10:00 (US) July Business Inventories: 0.2%e v 0.2% prior.

- 11:00 (CO) Colombia July Retail Sales Y/Y: 11.4%e v 10.1% prior.

- 11:00 (CO) Colombia July Manufacturing Production Y/Y: 3.2%e v 2.2% prior; Industrial Production Y/Y: 1.3%e v 1.3% prior.

- 11:30 (US) Treasury to sell 6-week bills.

- 13:00 (US) Treasury to sell 20-Year Bond Reopening.

- 16:30 (US) Weekly API Crude Oil Inventories:

- 18:45 (NZ) New Zealand Q2 Current Account Balance (NZD): -2.7Be v -2.3B prior; Current Account GDP Ratio YTD: -4.8%e v -5.7% prior.

- 19:50 (JP) Japan Aug Trade Balance: -¥510.8Be v -¥118.4B prior; (revised from -¥117.5B ); Adjusted Trade Balance: -¥341.3Be v -¥303.0B prior; Exports Y/Y: -2.0%e v -2.6% prior; Imports Y/Y:-4.1%e v -7.4% prior (revised from -7.3%).

- 20:30 (AU) Australia Aug Westpac Leading Index M/M: No est v +0.14% prior.

- 20:30 (SG) Singapore Aug Non-Oil Domestic Exports Y/Y: +0.8%e v -4.6% prior; Electronic Exports Y/Y: No est v 2.8% prior.
- 21:30 (AU) RBA’s Jones.