Trump revives apprentice role and tries to declare 'you're fired' to Fed's Cook

EU mid-market update: Trump revives Apprentice role and tries to declare 'You're Fired' to Fed's Cook; Instability theme in Europe as UK long-end gilts surge and French assets collapse on theoretical IMF intervention.

Notes/observations

- UK markets returned from extended weekend. Bond market focus has been held on 30-year yield, which climbed >8bps to highs last seen in early April. As well as global bond market spillover, supply-demand imbalances and stick services inflation in UK, the climb in 30-year is being attributed to fiscal pressures on the govt and its narrowing fiscal headroom ahead of its Autumn Budget. Current yields are comparable to 2022 mini-budget crisis with Liz Truss as PM.

- French CAC40 dropped ~2% after Finance Min Lombard warned of a theoretical possibility of IMF intervention if PM Bayrou's minority govt falls during a Sept 8th confidence vote over budget cuts. The OAT-German bund 10-year yield spread widened.

- Trump states admin removes Fed's Gov Cook "immediately" in a letter posted on Truth Social but any US Pres does not have singular authority to remove a Fed Board Gov at will. Gov's can only be removed 'for cause', such as neglect of duty or malfeasance in office. Cook response is firm, stating there is no 'cause' for her to be fired and will not resign. Running theme of Fed independence being challenged. Some analysts see the base case as Cook to challenge the action in court and would likely be granted a temporary injunction to stay the removal order, pending litigation.

- TTN Note: The FOMC has 12 voting seats in a normal year (7 governors + New York Fed president + 4 rotating presidents). Seven voting members make an FOMC quorum, and they can transact business and take policy decisions at a meeting so long as at least one is a Reserve Bank representative. If fewer than seven members are in office, then whoever is in office constitutes the quorum.

- Nvidia earnings tomorrow: Focus on the Oct guide and Rubin cadence, with checks reaffirming Rubin is on schedule (tape-out June, boards mid-2026, volume late Q3-26); near-term stock reaction likely hinges on quantified hyperscaler CapEx color in Sept-October.

- TTN Reminder: Judge Amit Mehta is expected to issue a final ruling in late Aug or early Sept on remedies proposed in the DOJ’s landmark antitrust case against Google, following the August 2024 decision identifying monopolistic behavior. AP reports he “intends to issue a ruling by Labor Day,” while JPMorgan flags August as a possibility — so a slip into early September is a clear risk to timing.

- Asia closed lower with Hang Seng underperforming -1.2%. EU indices -0.4% to -1.8%. US futures -0.2%. Gold +0.3%, DXY -0.1%; Commodity: Brent -1.1%, WTI -1.3%; Crypto: BTC -1.4%, ETH -4.1%.

Asia

- Japan July PPI Services Y/Y: 2.9% v 3.2%e.

- Australia Central Bank (RBA) Aug Minutes noted that the pace of cuts to be determined by data, balance of global risks; Stance still somewhat restrictive.

- South Korea Aug Consumer Confidence: 111.4 v 110.8 prior.

Europe

- France PM Bayrou called a Budget confidence vote for Sept 8th during an extraordinary session of parliament to force them to take a position on what he said were “urgent and indispensable” measures to repair France’s degraded public finances. (**Note: Three main opposition parties seem set to oust PM in no confidence vote).

- UK Aug BRC Shop Price Index Y/Y: 0.9% v 1.0%e; Food prices Y/Y: 4.2% v 4.0% prior (highest in 17 months).

Americas

- Trump removed Fed Governor Lisa Cook; effective immediately in the wake of allegations that she falsified documents on mortgage applications. Cook was expected to challenge the decision in federal court.- Fed’s Cook said she would not resign and rejected Trump’s authority to remove her, stressing that no cause exists for her dismissal.

- Fed's Williams (voter) noted that the big question today was whether the era of low r-star would endure. Financial market measures of r-star are contaminated by liquidity and risk premiums, making a direct read of “what the markets think” elusive.

- Pres. Trump stressed that he would stand up to countries that attack our incredible American Tech Companies. considering a United States travel ban for European Union officials responsible for the bloc’s Digital Services Act over claims it censors Americans.

Trade

- Trump warned that China must supply magnets to the US or face tariffs of up to 200%.

- Senior Chinese trade negotiator Li Chenggang to travel to Washington this week for the first round of trade talks in the US.

- President Trump reiterated his stance on trade in a meeting with South Korean President Lee, insisting the 15% tariff on Korean goods would remain intact.

- White House confirmed South Korean companies to invest ~$150.0B, (separate from $350B of investment as a series of MOUs by South Korea as a nation) with Korean Air to order 103 Boeing planes, shipbuilding for the US and US military equipment purchases. Defense cost-sharing reportedly not yet discussed.

- Japan trade rep Akazawa to head to the US this week to further demand a written agreement, cut overlapping tariffs on Japanese exempted goods ASAP.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.70% at 554.90, FTSE -0.55% at 9,269.91, DAX -0.42% at 24,160.69, CAC-40 -1.82% at 7,700.61, IBEX-35 -0.60% at 15,157.50, FTSE MIB -0.91% at 42,836.00, SMI +0.01% at 12,203.85, S&P 500 Futures -0.15%].

Market focal points/key themes: European indices opened lower across the board and remained under pressure through the early part of the session; geopolitics weighing on market sentiment, with Frech PM calling for a no confidence vote and CAC 40 down over 2%; all sectors start the day in the red; less negative sectors include telecom and technology; among sectors leading the way lower are financials and materials; Sidara reduces offer for John Wood; Bavarian Nordic receives takeover offer from Nordic Capital; focus on US durable goods coming out later in the day; earnings expected in the upcoming Americas session include PVH Corp.

Equities

- Consumer discretionary: Bunzl [BNZL.UK] +6.5% (earnings; resumes buybacks), Puma [PUM.DE] -2.5% (Pinault family working with advisers on potential sale of company and have reached out to potential suitors - press) - Consumer staples: AB Foods [ABF.UK] -4.5% (analyst downgrade; UK grocery prices rise).

- Financials: Commerzbank [CBK.DE] -5.5% (analyst downgrade).

- Industrials: Thales [HO.FR] -4.0% (France Fin Min Lombard: Want to avoid risk of IMF intervention in case the government falls, but I cannot pretend that this risk does not exist; Note: French govt holds large stakes in some key firms).

- Technology: Filtronic [FTC.UK] +6.5% (SpaceX order).

Speakers

- France Fin Min Lombard stated that certainly not resigned to govt falling on Sept 8th; Wanted to avoid risk of IMF intervention in case the government fell, but I could not pretend that this risk did not exist.

- Sweden Central Bank (Riksbank) Aug Minutes reiterated stance of some probability of cut in H2. Probability of lastingly high inflation to be low.

- Finland Pres Stubb noted that he called Trump on Thurs; Conveyed message that seemed 'very unlikely' Putin would agree to bilateral meeting with Zelenskiy.

Currencies/fixed income

- USD steady after some wobbling in the aftermath of Trump sending a letter to Fed Chair Powell calling for the removal of Fed Board member Lisa Cook. The greenback was initially softer as the perceived move was viewed as an attack of Fed independence. USD also facing headwinds on the recent dovish Fed Chair Powell Jackson Hole speech. Safe-haven demand also finding some legs as Trump renewed tariffs threats.

- EUR/USD at 1.1620 by mid-session and continued to remain locked within the 1.15-1.20 trading range. French political drama providing some headwinds for the Euro.

- USD/JPY above 147.50.

- 10-year German Bund yield at 2.72% and 10-year Gilt yield at 4.74. 10-year Treasury yield: 4.30%.

Economic data

- (FI) Finland July Unemployment Rate: 9.3% v 9.9% prior.

- (SE) Sweden July PPI M/M: +1.1% v -0.6% prior; Y/Y: -0.6% v -3.1% prior.

- (FR) France Aug Consumer Confidence: 87 v 89e.

- (ZA) South Africa Jun Leading Indicator: 111.7 v 111.3 prior.

- (TW) Taiwan July Industrial Production Y/Y: 18.1% v 17.0%e.

- (PL) Poland July Unemployment Rate: 5.4% v 5.4%e.

- (PL) Poland Q2 Unemployment Rate: 2.8% v 3.2%e.

- (HK) Hong Kong July Trade Balance (HKD): -34.1B v -24.7Be; Exports Y/Y: 14.3% v 11.3%e; Imports Y/Y: 16.5% v 12.2%e.

Fixed income issuance

- (AT) Austria Debt Agency (AFFA) opened its book to sell EUR-denominated 7-year RAGB bonds via syndicate; guidance seen +33bps to mid-swap.

- (BE) Belgium Debt Agency (BDA) began its subscription period to sell 1-year and 10-year Retail bonds (*subscription from Aug 26th thru Sept 3rd).

- (AT) Austria Debt Agency (AFFA) sold total € vs. €3.0B indicated in 3-month bills (2 tranches).

- (IT) Italy Debt Agency (Tesoro) sold €3.0B vs. €2.5-3.0B indicated range in 2.10% Aug 2027 BTP bonds; Avg Yield: 2.20% v 2.11% prior; Bid-to-cover: 1.56x v 1.67x prior.

Looking ahead

- (RO) Romania July M3 Money Supply Y/Y: No est v 8.9% prior.

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

- 05:25 (CH) Switzerland to sell 3-month Bills.

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

- 05:30 (ZA) South Africa to sell combined ZAR3.75B in 2033, 2038 and 2048 bonds.

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

- 06:00 (EU) ECB 3-month LTRO allotment (prior €3.69B with 21 bids recd).

- 06:45 (FR) ECB's Villeroy(France)in Bordeaux.

- 07:00 (BR) Brazil Aug FGV Construction Costs M/M: 0.8%e v 0.9% prior.

- 07:30 (BR) Brazil July Current Account Balance: -$5.5Be v -$5.1B prior; Foreign Direct Investment (FDI): $4.9Be v $2.8B prior.

- 08:00 (HU) Hungary Central Bank (MNB) Interest Rate Decision: Expected to leave Base Rate unchanged at 6.50%.

- 08:00 (BR) Brazil Aug IBGE Inflation IPCA-15 M/M: -0.2%e v +0.3% prior; Y/Y: 4.9%e v 5.3% prior.

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

- 08:30 (US) Aug Philadelphia Fed Non-Manufacturing Activity: No est v -10.3 prior.

- 08:30 (US) July Preliminary Durable Goods Orders: -3.8%e v -9.4% prior; Durables (Ex Transportation): 0.2%e v 0.2% prior; Capital Goods Orders (non-defense/ex-aircraft): +0.2%e v -0.8% prior; Capital Goods Shipments (non-defense/ex-aircraft): 0.2%e v 0.3% prior.

- 08:30 (US) Fed’s Barkin.

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

- 09:00 (US) Jun FHFA House Price Index M/M: -0.1%e v -0.2% prior; Q/Q: No est v 0.7% prior.

- 09:00 (US) Jun S&P CoreLogic House Price Index (20-City) M/M: -0.20%e v -0.34% prior; Y/Y: 2.09%e v 2.79% prior; House Price Index (overall) Y/Y: No est v 2.25% prior.

- 09:00 HU) Hungary Central Bank (MNB) post rate decision statement.

- 09:45 (CA) Bank of Canada (BOC) Gov Macklem.

- 10:00 (US) Aug Richmond Fed Manufacturing Index: -11et v -20 prior.

- 10:00 (US) Aug Consumer Confidence: 96.5e v 97.2 prior.

- 10:30 (US) Aug Dallas Fed Services Activity: No est v 2.0 prior.

- 10:30 (UK) DMO quarterly meeting with investors.

-10:30 (CA) Canada to sell 3-month, 6-month and 12-month bills.

-11:30 (US) Treasury to sell 6-Week Bills.

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

- 12:00 (UK) BOE’s Mann (dissenter).

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

- 17:00 (KR) South Korea Aug Manufacturing Business Survey: No est v 91.9 prior; Non-Manufacturing Business Survey: No est v 88.7 prior.

- 20:30 (AU) Australia July Westpac Leading Index M/M: No est v -0.03% prior.

- 21:30 (CN) China July Industrial Profits Y/Y: No est v -4.3% prior; Industrial Profits YTD Y/Y: No est v -1.8% prior.

- 21:30 (AU) Australia July CPI Y/Y: No est v 1.9% prior; CPI Trimmed Mean Y/Y: No est v 2.1% prior.

- 21:30 (AU) Australia Q2 Construction Work Done: 1.0%e v 0.0% prior.

- 22:00 (KR) South Korea July Retail Sales Y/Y: No est v 7.3%e; Department Store Sales Y/Y: No est v -0.9% prior.

- 23:00 (TH) Thailand to sell combined THB27B in 2035 and 2072 bonds.