- US stocks eventually strengthened in a reversal of post-CPI moves with outperformance in the tech-heavy NDX which was buoyed by strength in mega-cap tech names including Nvidia (NVDA)(+8%), while sectors were ultimately mixed with underperformance in Energy -0.93% and Consumer Staples -0.88%. Nonetheless, it was a choppy day overall for markets as participants digested the US CPI which printed mixed but with attention on the hotter-than-expected core M/M print.
- USD eked mild gains after recovering from the initial pressure seen due to overnight JPY strength and US VP Harris's perceived Presidential Debate win which is seen as USD-negative given expectations of easier Fed policy and less aggressive tariffs compared to Trump, while the rebound in the greenback was helped by the US CPI data which was ultimately mixed although a hotter-than-expected Core MM metric saw the odds of 50bps cut at next week's meeting dwindle from around 30% to 15%.
- Looking ahead, highlights include New Zealand Electronic Card Retail Sales & FPI, Japanese PPI, Australian MI Inflation Expectations, Comments from BoJ's Tamura, Supply from Japan.
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LOOKING AHEAD
- Highlights include New Zealand Electronic Card Retail Sales & FPI, Japanese PPI, Australian MI Inflation Expectations, Comments from BoJ's Tamura, Supply from Japan.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stocks eventually strengthened in a reversal of post-CPI moves with outperformance in the tech-heavy NDX which was buoyed by strength in mega-cap tech names including Nvidia (NVDA)(+8%), while sectors were ultimately mixed with underperformance in Energy -0.93% and Consumer Staples -0.88%. Nonetheless, it was a choppy day overall for markets as participants digested the US CPI which printed mixed but with attention on the hotter-than-expected core M/M print.
- SPX +1.07% at 5,554, NDX +2.17% at 19,237, DJIA +0.31% at 40,862, RUT +0.31% at 2,104.
- Click here for a detailed summary.
NOTABLE HEADLINES
- Fed’s Office of Inspector General released a report on Atlanta Fed President Bostic’s (2024 Voter) financial disclosures in which it stated that Bostic violated Fed rules on trading and created an appearance of acting on confidential information, as well as created the appearance of a conflict of interest. However, it didn’t find evidence that Bostic traded on confidential information.
DATA RECAP
- US CPI MM, SA (Aug) 0.2% vs. Exp. 0.2% (Prev. 0.2%)
- US Core CPI MM, SA (Aug) 0.3% vs. Exp. 0.2% (Prev. 0.2%)
- US CPI YY, NSA (Aug) 2.5% vs. Exp. 2.6% (Prev. 2.9%)
- US Core CPI YY, NSA (Aug) 3.2% vs. Exp. 3.2% (Prev. 3.2%)
- US Cleveland Fed CPI (Aug) 0.3% (Prev. 0.3%)
FX
- USD eked mild gains after recovering from the initial pressure seen due to overnight JPY strength and US VP Harris's perceived Presidential Debate win which is seen as USD-negative given expectations of easier Fed policy and less aggressive tariffs compared to Trump, while the rebound in the greenback was helped by the US CPI data which was ultimately mixed although a hotter-than-expected Core MM metric saw the odds of 50bps cut at next week's meeting dwindle from around 30% to 15%.
- EUR pared early gains and returned to flat territory against the dollar but with the downside cushioned by support around the 1.1000 level.
- GBP weakened with GBP/USD retreating beneath the 1.3100 handle in the aftermath of the US CPI data, while UK GDP estimates missed forecasts.
- JPY was choppy and pared the overnight advances that were spurred by comments from BoJ's Nakagawa with the rebound in USD/JPY facilitated by US CPI data and the improvement in risk appetite. Furthermore, the attention for the JPY now turns to incoming Japanese PPI data and comments from BoJ Board Member Tamura.
FIXED INCOME
- T-notes settled marginally lower after whipsawing during the session with the curve flatter after the hotter core CPI M/M print offset upside on Harris's perceived win in the Presidential Debate and a very strong 10yr auction.
COMMODITIES
- Oil prices gained, albeit in choppy conditions, as a reversal in risk conditions amid the backdrop of Hurricane Francine, eventually supported.
- US EIA Weekly Crude Stocks 0.8M vs. Exp. 1.1M (Prev. -6.9M)
- NHC said Francine was moving Northeastward towards the Louisiana coast with a life-threatening storm surge and hurricane-force winds expected to begin in the afternoon, while it is expected to rapidly weaken after landfall and the system is forecast to become post-tropical on Thursday.
- 39% of oil production and 49% of natgas production in the US Gulf of Mexico is shut, due to Hurricane Francine.
- Chile's Codelco copper production fell 10.7% Y/Y to 111.4k tons, while Escondida copper production rose 29.2% in July to 106.5k tons and Collahuasi copper production fell 6% Y/Y to 47k tons.
- Codelco reached an early contract agreement with the Ministro Hakes workers union.
GEOPOLITICAL
MIDDLE EAST
- Hamas said its negotiation team met Qatar's PM and Egypt's intelligence chief in Doha on Wednesday to discuss the latest Gaza developments. Furthermore, it reiterated its readiness to implement an 'immediate' ceasefire based on the US's previous proposal without accepting new conditions from any party.
OTHER
- Russian President Putin said that maybe Russia should think about export restrictions of some goods such as uranium and mentioned titanium nickel exports, although there is no rush in discussions on commodity export limits.
- Russian Foreign Ministry spokeswoman said Russia and China will react and not only politically if the US deploys missiles in Japan.
- Russia's Kremlin said the response will be appropriate regarding a potential US decision to allow Ukraine to use ATACMs to strike inside of Russia.
EU/UK
DATA RECAP
- UK GDP Estimate 3M/3M (Jul) 0.5% vs. Exp. 0.6% (Prev. 0.6%)
- UK GDP Estimate MM (Jul) 0.0% vs. Exp. 0.2% (Prev. 0.0%)
- UK GDP Estimate YY (Jul) 1.2% vs. Exp. 1.4% (Prev. 0.7%)
- UK Manufacturing Output MM (Jul) -1.0% vs. Exp. 0.2% (Prev. 1.1%)
- UK Manufacturing Output YY (Jul) -1.3% vs. Exp. -0.1% (Prev. -1.5%)
- UK Services MM (Jul) 0.1% vs. Exp. 0.2% (Prev. -0.1%)
- UK Services YY (Jul) 1.7% vs. Exp. 1.8% (Prev. 1.2%)
