Putin-Trump meeting was a big spectacle with no public-made substance

EU mid-market update: Putin-Trump meeting was a big spectacle with no public-made substance; Market awaits more developments with Powell at Jackson Hole on Fri and Walmart earnings on Thurs.

Notes/observations

- Sentiment is undecided, as Asia traded up but Europe fades lower. US futures are flat to lower. Bitcoin off highs, down at 1.5-week lows. Oil market is mixed, digesting the Trump-Putin summit. US dollar is flat to marginally higher. S&P Vix is comfortably low.

- UK bond yields retreat after Friday’s sharp rise, with focus shifting to Wednesday’s inflation report.

- Market eyeing up Trump's tariffs on chips, steel and pharma this week or next, and Jackson Hole Economic Symposium for Fed commentary, held between Aug 21st-23rd (Thurs-Sat with dovish dissenters Bowman and Waller set to give speeches in coming days); Powell has Keynote at 15:00 ET on Friday.

- Geopolitics is main theme from weekend, after Trump invited Putin for bilateral meeting to discuss Ukraine, which was held in Alaska late on Friday. Read-outs are dependent on news source, but what is clear is that no agreement was officially reached, and nothing has changed in the lay of the land. Trump is meeting Ukraine Pres Zelenskiy and European leaders later today. Schedule (ET): 12:00 p.m. European leaders arrive; 1:00 p.m. Trump greets Zelensky; 1:15 p.m. bilateral Trump - Zelensky meeting; 2:15 p.m. Trump greets European leaders; 3:00 p.m. multilateral meeting with European leaders.

- Putin’s demand that Ukraine quit the whole Donbas starts with hydrology: control of the Siverskyi Donets - Donbas canal’s intakes, lift pumps, and filtration nodes is day-to-day leverage over cities and mines and remains the only way to solve the water crisis in Russia-occupied territories. But Ukraine’s Constitution requires that any change to the country’s territory be decided exclusively by an all-Ukrainian referendum. Referendums are suspended while martial law is in effect.

- DeepState’s mapping team says Russia has gained 5,842 sq km since Nov 2022 - just <1% of Ukraine’s internationally recognized territory. The remainder of Donbas that Ukraine still holds is roughly 30% of Donetsk region or about 7,955 sq km - ~1.3% of Ukraine.

- Note: Under Trump 2.0, King Dollar has a second anchor: investors now price U.S. defense posture alongside tariffs and Fed credibility. After February’s public dressing down of Zelensky, the euro rose about 2 cents within 48 hours as Asian reserve managers trimmed U.S. custody holdings, revealing how alliance risk can wobble the dollar. By late July, a hard pivot to full spectrum pressure on Russia sent the Bloomberg Dollar Index up ~1.8% in three sessions.

- Asia closed mixed with Nifty 50 outperforming +1.2%. EU indices -0.5% to +0.1%. US futures -0.1%. Gold +0.4%, DXY +0.2%; Commodity: Brent +0.1%, WTI +0.2%; Crypto: BTC -2.8%, ETH -6.6%.

Asia

- White House trade adviser Navarro: If India wants to be treated as strategic partner of the US, it needs to start acting like one.

Taiwan

- President Trump stated thT China President Xi told him China would not invade Taiwan while he is US president.

- China Foreign Ministry: Its China's own affair and stand ready to work with greatest effort for peaceful reunification.

Global conflict/tensions

- Friday’s Trump-Putin meeting concluded without any breakthroughs but without escalating geopolitical tensions.

- Trump suggested the best way to end the Ukraine war is to go directly to a peace agreement and not a mere ceasefire; European leaders back his plan for a trilateral summit after meeting Zelensky.

- President Trump said to have told European leaders that he was open to providing US security guarantees to Ukraine.

- Trump outlined the two conditions that Ukraine must cede Crimea and agrees never to join NATO.

- US Sec of State Rubio noted that both Russia/Ukraine will have to make concessions to get a peace deal; US continues to do everything it can to reach an agreement.

- Ukraine President Zelensky noted current front lines should be the basis for negotiations; security guarantees should be like NATO Article 5.

- Trump to meet Zelensky along with key European leaders at the White House on Monda. to set out terms for a potential peace deal he discussed with Putin.

Europe

- UK Aug Rightmove House Prices M/M: -1.3% v -1.2% prior; Y/Y: 0.3% v 0.1% prior.

Americas

- Fed’s Daly (non-voter): A couple of cuts are warranted this year and maybe a few more; We have to be ahead in order to not be behind.

- Fed’s Bostic said to have noted consumers are growing more stressed and tariff costs are real. open to adjusting interest rates soon.

Energy

- President Trump noted that did not immediately need to consider retaliatory tariffs on countries such as China for buying Russian oil but might have to "in two or three weeks."

- White House trade adviser Navarro: If India wants to be treated as strategic partner of the US, it needs to start acting like one. India's buying of Russian crude oil needs to stop.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.03% at 553.40, FTSE -0.01% at 9,138.20, DAX -0.27% at 24,308.07, CAC-40 -0.50% at 7,884.11, IBEX-35 -0.26% at 15,242.95, FTSE MIB +0.04% at 42,674.00, SMI -0.08% at 12,062.13, S&P 500 Futures -0.09%].

Market Focal Points/Key Themes: European indices opened generally lower and remained under pressure through the early part of the session; risk appetite seen diminished on geopolitical concerns; among sectors managing gains are real estate and utilities; sectors leading to the downside include financials and materials; ZI Zenitch launches offer for u-blox; HICL sells seven PPP assets in the UK; focus on summit on Ukraine in Washington later in the day; earnings expected in the upcoming US session include Palo Alto Networks.

Equities

- Energy: Vestas Wind Systems [VWS.DK] +17.0%, Orsted [ORSTED.DK] +3.0% (guidance issued by US govt agencies on tax credits for clean energy projects).

- Financials: Commerzbank [CBK.DE] -4.5% (analyst downgrade).

- Healthcare: Novo Nordisk [NOVOB.DK] +4.0% (Wegovy US approval for liver disease), Valneva [VLA.FR] +7.5% (Canada authorization).

- Industrials: Rheinmetall [RHM.DE] +3.0% (upcoming Trump-Zelenskiy talks).

- Technology: u-blox [UBXN.CH] -3.0% (tender offer).

- Materials: Lanxess [LXS.DE] -2.5% (analyst downgrade).

Speakers

- China Foreign Ministry: Prepared to continue communication with India on issues with positive attitude.

- Iran Foreign Ministry: Tehran will continue talks with IAEA.

Currencies/Fixed income

- Muted start to trading week. Focus on Fed Chair Powell speech on Friday. Likely to be an eventful week for U.S. interest rate policy. Powell speech viewed as a 'make-or-break' moment for a dovish Fed. Markets await hints from Fed Chair Powell at Jackson Hole regarding a now widely-expected rate cut in September. Money markets are pricing in an 84% probability of a 25 basis-point cut at the next meeting.

- EUR/USD drifted lower during a quiet EU session. Pair at 1.1675 by mid-session.

- GBP/USD at 1.3530 as UK 10-year yields decline by 3bps in session. Focus on Wed’s release of UK CPI data.

- USD/JPY drifted higher to test 147.50. Japan government says it isn't pressing BOJ for a rate hike.

- 10-year German Bund yield at 2.74% and 10-year Gilt yield at 4.66%. 10-year Treasury yield: 4.29%.

Economic data

- (CH) Swiss Q2 Industrial Output Y/Y: -0.1% v +0.7%e.

- (CZ) Czech July PPI Industrial M/M: 0.1% v 0.0%e; Y/Y: -1.2% v -1.2%e.

- (ES) Spain Jun Trade Balance: -Ӫ3.6B v -€2.5B prior.

- (CH) Swiss Weekly Total Sight Deposits (CHF): 465.7B v 465.9B prior; Domestic Sight Deposits: 439.1B v 437.1B prior.

- (IS) Iceland July International Reserves (ISK): 907B v 893B prior.

- (EU) Euro Zone Jun Trade Balance (Seasonally Adj): €2.8B v €15.6B prior; Trade Balance NSA (unadj): €7.0B v €14.5Be.

Fixed income issuance

- (NO) Norway sold NOK2.0B vs. NOK2.0B indicated in 6-month Bills.

Looking ahead

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

- 05:30 (DE) Germany to sell €3.0B in 12-month BuBills.

- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-4.0B in 3-month and 6-month bills.

- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays).

- 06:00 (IL) Israel July Unemployment Rate: No est v 2.7% prior.

- 06:00 (IL) Israel Jun Manufacturing Production M/M: No est v 7.3% prior.

- 06:00 (IL) Israel to sell bonds.

- 6:00 (RO) Romania to sell RON400M in 6.3% 2029 Bonds.

- 6:00 (RO) Romania to sell RON500M in 7.35% 2031 Bonds.

- 06:00 (NO) Norway announcement on upcoming bond issuance (held on Wed).

- 07:00 (BR) Brazil Aug FGV Inflation IGP-10 M/M: 0.2%e v -1.7% prior; Y/Y: No est v 3.4% prior.

- 07:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 08:00 (PL) Poland July CPI Core M/M: 0.3%e v 0.3% prior; Y/Y: 3.4%e v 3.4% prior.

- 08:00 (BR) Brazil Jun Economic Activity Index (Monthly GDP) M/M: 0.0%e v -0.7% prior; Y/Y: 1.2%e v 3.2% prior.

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

- 08:15 (CA) Canada July Annualized Housing Starts: 265.0Ke v 283.7K prior.

- 08:30 (US) Aug New York Fed Services Business Activity: No est v -9.3 prior.

- 08:30 (CA) Canada Jun Int'l Securities Transactions (CAD): No est v -2.79B prior.

- 08:30 (CL) Chile Q2 GDP Q/Q: 0.4%e v 0.7% prior; Y/Y: 2.9%e v 2.3% prior.

- 08:30 (CL) Chile Q2 Current Account Balance: -$2.0Be v $0.6B prior.

- 08:30 (CL) Chile Central Bank Traders Survey.

- 09:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 09:00 (FR) France Debt Agency (AFT) to sell €5.8-7.4B in 3-month, 6-month and 12-month bills.

- 10:00 (US) Aug NAHB Housing Market Index: 34e v 33 prior.

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

- 12:45 (US) Fed’s Bowman.

- 13:15 (US) President Trump meet’s Ukraine President Zelenskyy.

- 15:00 (US) President Trump meets with EU leaders.

- (AR) Argentina July Budget Balance (ARS): No est v 790.5B prior.

- 16:00 (US) Weekly Crop Progress Report.

- 18:45 (NZ) New Zealand Q2 PPI Output Q/Q: No est v 2.1% prior; PPI Input Q/Q: No est v 2.9% prior.

- 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 89.3 prior.

- 20:30 (AU) Australia Aug Westpac Consumer Confidence: No est v 93.1 prior.

- 22:30 (HK) Hong Kong to sell 3-month and 6-month bills.

- 23:00 (KR) South Korea Q2 Household Credit (KRW): No est v 1,928T prior.

- 23:00 (TH) Thailand to sell combined THB115B in 3-month and 6-month bills.

- 23:30 (JP) Japan to sell ¥3.2T in 12-month Bills.