Waller is frontrunner to replace Powell as Fed Chair in May 2026

EU mid-market update: Waller is frontrunner to replace Powell as Fed Chair in May 2026; GPT5 release streamlines its user experience more than it leaps ahead in intelligence.

Notes/observations

- Gold in focus after FT reports US imposed tariffs on most-traded form of Comex gold bars; US tariffs on Swiss one-kilo and 100-oz gold bars risk rewiring bullion’s market plumbing - tightening London’s funding loop, boosting US refiners, and shifting global gold liquidity toward COMEX in a structural break from Switzerland’s refining dominance.

- Calm FX market, yesterday’s BoE rate cut was seen as hawkish; MPC expected to slow QT pace in Sept.

- No substantial economic data of note. Looking ahead is quiet too, with only China CPI worth paying attention to tonight.

- Fed’s Waller tipped as leading candidate to replace Chair Powell; Trump to nominate CEA Chair Miren to Board. He is Harvard-trained economist, who has argued tariffs have had “zero impact” on inflation, but with the Senate in recess, the analysts doubts he could be confirmed before the Sept 16–17 FOMC meeting; as vacancies have been common, his recess appointment ensures a short-term, dovish voice likely to back earlier rate cuts and align closely with the administration’s economic agenda.

- Tier1 analysts see upside risk to the current 10% reciprocal tariff on China, likely raising it to 20–25% unless Beijing offers “F.I.R.E.” concessions (Fentanyl crackdown, US imports, rare earth supply, market entry), which could prompt partial fentanyl tariff removal and reduce China’s effective tariff rate from ~40% to 30–35% ahead of the Aug 12 US–China deal deadline.

- OpenAI’s GPT5 release brings new era of LLM, it unifies previous models (GPT-4o, o3, o4-mini) into a single, smarter system with enhanced reasoning, multimodal capabilities (text, images, code), and a 2.1% deception rate (down from 4.8%). Excels in complex tasks like coding, math, and science, offers personalized memory, and prioritizes safety with “safe completions.” It lacks continuous learning and some multimodal features like Voice Mode.

- Asia closed lower with exception of Nikkei225, +1.9%. EU indices -0.3% to +0.8%. US futures +0.1-0.2%. Gold +0.0%, DXY +0.2%; Commodity: Brent +0.4%, WTI +0.3%; Crypto: BTC +1.3%, ETH +4.3%.

Asia

- China PBOC said to 'eye' liquidity boost and possible RRR cut - Chinese press.

- BOJ Summary of Opinions noted that at least two to three more months were needed to assess the impact of US tariff policy. Noted that should not become overly cautious and miss the opportunity to raise the policy interest rate.

- Japan Fin Min Kato: Want to deepen talks with other parties (in reference to next FY budget) - financial press.

Americas

- Reportedly Fed's Waller is favored as the potential candidate for Chair; Has met with Trump's team, but not the President - press.

- US has reportedly imposed tariffs on imports of one-kilo gold bars - FT, citing a letter from Customs Border Protection.

- Tesla CEO Musk: There is no sense for Tesla to scale two different chip designs; Affirms all efforts focused on Tesla AI5, AI6 and subsequent chips.

- Tesla said to disband Dojo supercomputer team after leader leaves; To rely more on Nvidia, AMD, Samsung - press.

Trade

- Japan Trade Negotiator Akazawa: Regrettable that the US 'stacked' tariffs despite trade deal; have been able to confirm non-stacking stance from the US with US to pay back stacked levies later.

- Japan PM Ishiba: Various issues over implementation of US trade deal.

- Japan Chief Cabinet Sec Hayashi: No gap in understanding on tariffs between the US and Japan.

- Japan Economy Min Muto: If US levies chip tariff Japan 'not disadvantaged' vs 'others'.

- Treasury Sec Bessent: China tariffs can be on the table at some point.

Conflicts tensions

- President Trump noted that Russia Pres Putin did not have to meet with Ukraine Pres Zelenskiy before he did. Russia ceasefire/peace plan deadline up to Putin.

- Israel said to be considering withdrawing defense and security co-operation with the UK if PM Starmer goes ahead with recognizing Palestine.

- Israel Security Cabinet approved PM Netanyahu's plan to seize Gaza City - press.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.15% at 546.84, FTSE -0.10% at 9,091.90, DAX -0.24% at 24,131.43, CAC-40 +0.17% at 7,722.46, IBEX-35 +0.82% at 14,797.93, FTSE MIB +0.78% at 41,718.00, SMI -0.13% at 11,841.31, S&P 500 Futures +0.21%].

Market Focal Points/Key Themes: European indices open generally higher and remained in the green through the early part of the session; among sectors trending higher are materials health care; lagging sectors include financials and communication services; WithSecure receives takeover offer from CVC, Risto; earnings expected in the upcoming Americas session include Under Armour, Wendy’s and American Axle.

Equities

- Consumer discretionary: Bechtle [BC8.DE] +11.5% (earnings; July trends).

- Energy: ENBW [EBK.DE] -1.0% (earnings) - Financials: Munich Re [MUV2.DE] -8.5% (earnings; trims Rev outlook) - Healthcare: GSK [GSK.UK] +1.5% (CureVac will make an upfront settlement of $370M to GSK).

- Technology: ASML [ASML.NL] +0.5% (TSMC sales growth again decelerates; OpenAI GPT-5 release described as "incremental" by analysts).

Speakers

- None seen.

Economic data

- (SE) Sweden July Maklarstatistik Housing Prices: -0.3% v 0.0% prior; Apartment Prices Y/Y: -0.1% v +0.2% prior.

- (NL) Netherlands Jun Consumer Spending Y/Y: 0.7% v 2.6% prior.

- (NL) Netherlands Jun Manufacturing Production M/M: -0.2% v +0.4% prior; Y/Y: -0.2% v +0.8% prior; Industrial Sales Y/Y: +1.8% v -3.1% prior.

- (FI) Finland Jun Industrial Production M/M: -0.8% v -0.3% prior; Y/Y: 0.4% v 5.2% prior.

- (JP) Japan July Eco Watchers Current Survey: 45.2 v 45.5e; Outlook Survey: 47.3 v 46.4e.

- (FR) FRANCE Q2 ILO UNEMPLOYMENT RATE: 7.5% V 7.5%E; Mainland Unemployment Rate: 7.3% v 7.3%e.

- (SE) Sweden Jun Private Sector Production M/M: +2.0% v -0.2% prior; Y/Y: 4.9% v 1.8% prior; Industrial Orders M/M: +5.7% v -3.7% prior; Y/Y: +1.0% v -4.1% prior; Industry Production Value Y/Y: 12.8% v 3.0% prior; Service Production Value Y/Y: 3.2% v 1.4% prior.

- (SE) Sweden Jun Household Consumption M/M: +0.6% v -0.9% prior; Y/Y: 2.1% v 0.8% prior.

- (CH) Swiss July SECO Consumer Confidence: -32.8 v -30.0e.

- (AT) Austria Jun Industrial Production M/M: -0.2% v -0.4% prior; Y/Y: 0.6% v -0.1% prior.

- (AU) Australia July Foreign Reserves (A$): 102.8B v 101.9B prior.

- (TW) Taiwan July Trade Balance: $14.3B v $11.1Be; Exports Y/Y: 42.0% v 29.6%e; Imports Y/Y: 20.8% v 19.2%e.

- (RU) Russia Narrow Money Supply w/e Aug 1st (RUB): 18.48T v 18.46T prior.

- (UN) July FAO World Food Price Index: 130.1 v 128.0 prior.

- (CZ) Czech July Unemployment Rate: 4.4% v 4.4%e.

- (TH) Thailand May Foreign Reserves w/e Aug 1st: $263.9B v $264.7B prior.

- (GR) Greece July CPI Y/Y: 3.1% v 2.8% prior; CPI EU Harmonized Y/Y: 3.7% v 3.6% prior.

- (GR) Greece Jun Industrial Production Y/Y: 0.5% v -2.0% prior.

- (HU) Hungary July YTD Budget Balance (HUF): -2.786T v -2.774T prior.

- (IS) Iceland July Preliminary Trade Balance (ISK): -44.2B v -41.7B prior.

Fixed income issuance

- (IN) India sold total INR250B vs. INR250B indicated in 2028 and 2035 bonds.

Looking ahead

- 05:25 (EU) ECB daily liquidity stats.

- 05:30 (ZA) South Africa to sell combined ZAR1.0B in I/L 2033, 2043 and 2050 Bonds.

- 06:00 (PT) Portugal Jun Trade Balance: No est v -€3.2B prior.

- 06:00 (IE) Ireland Jun Industrial Production M/M: No est v 12.4% prior; Y/Y: No est v 36.8% prior.

- 06:00 (IE) Ireland July Live Register Monthly Change: No est v 2.2K prior; Live Register Level: No est v 168.5K prior.

- 06:00 (UK) DMO to sell £5.5B in 1-month, 3-month and 6-month bills (£0.5B, £2.0B and £3.0B respectively).

- 07:00 (IN) India announces upcoming bill issuance (held on Wed).

- 07:15 (UK) BOE’s Pill (chief economist).

- 08:00 (RO) Romania Central Bank (NBR) Interest Rate Decision: Expected to leave Interest Rates unchanged at 6.50%.

- 08:00 (UR) Ukraine July CPI M/M: No est v 0.8% prior; Y/Y: 14.6%e v 14.3% prior.

- 08:00 (CL) Chile July CPI M/M: 0.6%e v -0.4% prior; Y/Y: 4.0%e v 4.1% prior.

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

- 08:30 (CA) Canada July Net Change in Employment: +10.0Ke v +83.1K prior; Unemployment Rate: 7.0%e v 6.9% prior; Full Time Employment Change: No est v 13.5K prior; Part Time Employment Change: No est v 69.5K prior; Participation Rate: 65.4%e v 65.4% prior; Hourly Wage Rate: 3.1%e v 3.2% prior.

- 10:20 (US) Fed’s Musalem.

- 11:00 (EU) Potential sovereign ratings after European close (S&P on Austria; Switzerland; Moody’s on Luxembourg; Fitch on Iceland).

- 13:00 (US) Weekly Baker Hughes Rig Count data.

- 15:00 (AR) Argentina Jun Industrial Production Y/Y: No est v 5.8% prior; Construction Activity Y/Y: No est v 8.6% prior.

- 19:00 (CO) Colombia July CPI M/M: No est v 0.1% prior; Y/Y: No est v 4.8% prior.

- 19:00 (CO) Colombia July CPI Core M/M: No est v 0.2% prior; Y/Y: No est v 4.9% prior.

- 21:30 (CN) China July CPI Y/Y: No est v 0.1% prior; PPI Y/Y: No est v -3.6% prior.