- US Bessent: If Trump thought inflation was a problem, he'd be willing to have rate hikes
- ECB's Simkus: Santa Claus may come, he may trim the Christmas tree, but not significantly
- ECB's Scicluna: There is no cut already in a box and waiting to be unpacked
- Eurozone July industrial production +0.3% vs +0.4% m/m expected
- Germany ZEW survey current conditions -76.4 vs -75.0 expected
- EU's von der Leyen: AI is reshaping global tech competition
- Italy August final CPI +1.6% vs +1.6% y/y prelim
- False alarm: the big spike in initial claims was caused by fraudulent filings in Texas
- Latest sanctions package against Russia not to be discussed this week, says EU officials
- ECB's Kazaks: Reduction in ECB rates is already very significant
- UK July ILO unemployment rate 4.7% vs 4.7% expected
- ECB's Villeroy: French growth is not strong enough but remains positive
- RBA's Hauser: AUD has been a well-functioning 'natural' hedge for global risk assets
- Fed to stick with a 25 bps rate cut this week - Morgan Stanley
- FX option expiries for 16 September 10am New York cut
It's been a relatively calm session in terms of data releases and newsflow. The main highlight were the UK employment report and the German ZEW survey.
The UK data was mostly in line with expectations, so it didn't change anything in terms of market pricing. The German ZEW, on the other hand, missed expectations slightly but the future outlook index surprised to the upside.
We also had a few ECB speakers throughout the session but the gist of it is that the central bank is on a hard pause and they will need significant reasons to adjust rates again. In absence of shocks, small deviations from their target won't require an adjustment.
In the final part of the session we also got comments from US Treasury Secretary Bessent on various topics. They were all positive as he remains upbeat on a deal with China and expects the Supreme Court to back Trump's administration on tariffs.
In markets, the most notable mover has been the US dollar. The greenback weakened further, especially against the Euro and the Swiss Franc. This has been the playbook since last Thursday when we got an in-line CPI and weak initial jobless claims. It turned out that initial claims were negatively skewed by fraudulent filings in Texas, so we can expect them to be revised lower.
The Core PCE for August though is expected to have risen by just 0.2%, keeping the Y/Y rate at 2.9%. That and two consecutive soft NFP reports kept the dovish bets on the Fed intact, although it's unlikely to see the FOMC outdove the market pricing tomorrow (which is what has been keeping the bond market rangebound).
This dovish positioning into the FOMC is also what kept on supporting risk assets. The US indices today reached new highs with gold also extending the rally into new all-time highs.
In the American session we have the Canadian CPI and the US Retail Sales data coming up.
