US stocks closed higher on Monday, owing a large part of the gains to a strategic partnership announced between NVIDIA and OpenAI.
Fed Governor Miran said Fed policy is ‘very restrictive’ and poses a risk to the Fed’s employment mandate. On interest rates, he said the appropriate Fed funds rate is in the mid-2% area, almost 2ppts below the current level.
The Dollar started the week on the back foot as newsflow was light to start the week. Tier 1 releases were absent, but will resume on Tuesday with S&P Global Flash estimates for PMIs for September due.
US Treasuries were little changed after last weekʼs Fed rate cut, with the complex trading mixed throughout the session as traders continue to digest the rate reduction, amid heavy Fed commentary.
Looking ahead, highlights include Australia/EZ/UK/US Flash PMIs (Sep), US Richmond Fed Index, Riksbank Announcement; NBH Policy Announcement; Speakers include BoEʼs Pill, Fedʼs Powell, Bostic, Bowman, ECBʼs Cipollone, BoCʼs Macklem, US President Trump at UN General Assembly; Supply from Australia, Netherlands, UK, Germany, US; Earnings from Micron, Kingfisher
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SNAPSHOT
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US TRADE
US stocks closed higher on Monday, owing a large part of the gains to a strategic partnership announced between NVIDIA and OpenAI. The deal is to see NVDA invest up to USD 100bln in OpenAI, deploying 10GW of AI centres, first to deploy in 2026. NVDA (+3.9%) saw upside on the news alongside a boost to the semiconductors and the tech sector, as well as equity indices. Meanwhile, Communications was the clear laggard amid lacklustre trade in Alphabet (GOOGL, -0.9%) and Meta (META, -1.7%). Macro updates were largely contained to central bank speakers.
SPX +0.44% at 6,694, NDX +0.55% at 24,761, DJI +0.14% at 46,382, RUT +0.59% at 2,463.
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NOTABLE HEADLINES
The White House said US President Trump will give a major speech tomorrow morning (Eastern Time), according to Reuters.
OpenAI and NVIDIA announced a strategic partnership to deploy 10 gigawatts of NVIDIA systems, with NVIDIA to invest up to USD 100 billion in OpenAI; OpenAI will deploy 10 gigawatts of AI data centers with NVIDIA, with the first gigawatt of systems to be deployed in 2026, and the companies said they look forward to finalising details in the coming weeks, according to an annoucement.
The White House said talks are ongoing with Republican and Democratic Congress members on a potential government shutdown, according to Reuters.
FED COMMENTARY
Fed Governor Miran said Fed policy is ‘very restrictive’ and poses a risk to the Fed’s employment mandate. On interest rates, he said the appropriate Fed funds rate is in the mid-2% area, almost 2ppts below the current level, and that an immigration-policy-driven reduction in population growth also exerts downward pressure on the neutral rate. He added that existing backward-looking estimates of r-star are too high and insufficiently account for fiscal and border policy changes, that monetary policy is well into restrictive territory, and that leaving rates roughly 2 percentage points too tight risks unnecessary layoffs and higher unemployment. On policy rules, he said Taylor-type rules are useful to gauge where the Fed funds rate should be but he is not ‘slavishly devoted’ to them. On inflation, he said he is committed to bringing inflation back to 2%, expects rent inflation to fall from 3.5% now to 1.5% in 2027, argued that forecasters have underappreciated the impact of immigration policy on rent inflation, said net zero immigration would imply 1ppt lower rent inflation per year, and noted that relatively small changes in some goods prices have led to unreasonable levels of concern. On financial conditions, he said loans and guarantees from East Asian nations increase credit supply and lower the neutral rate by 0.2 percentage point. On trade, he said tariffs will lead to substantial swings in net national saving. On the FOMC, he said he looks forward to working more with board staff and their forecasts in the coming months. In the Q&A, on dissent, he said it is better to vote for what you believe rather than trying to buttress consensus, and unless something changes he will continue to press for rate cuts and is willing to dissent again. On policy stance, he said policy is ‘considerably restrictive’ and a threat to economic momentum, that it is better to move to neutral quickly, but that he is not ‘panicked’ about the state of policy, and that he is focused on lowering inflation and supporting the job market. On the inflation target, he said any changes should only be entertained if the target has been achieved. On the balance sheet, he said it is swollen from unneeded asset buying but that the Fed has done a good job in shrinking it. On Fed independence, he said there is no question the Fed had gotten over its skis when it came to politics and was involved in too many areas outside its core mission, while noting that President Trump has never asked him to set policy in any certain way, according to Reuters.
Fed’s Hammack (2025 voter) said the US is in a two-speed economy with lower-income households struggling. On rate cuts, she said last week’s cut emerged from the view that the balance of risks is changing, that the Fed is being challenged on both sides of its dual mandate, and that policymakers should be very cautious in removing policy restriction. She added she has one of the higher estimates of neutral, that policy is only modestly restrictive. On inflation, she said it is likely to continue rising, with pressures returning in both goods and services. On the labour market, she said the headline payrolls number indicates some softness, there are signs of fragility, and while the 4.3% unemployment rate is healthy, the jobs market remains low-hiring and low-firing as businesses are reluctant to hire; she noted openings remain robust but inflation is still high, expects unemployment to tick up, and warned that removing restriction too quickly could overheat the economy, while adding she is not hearing about significant layoffs. On data issues, she said she has every confidence that she and her colleagues are making decisions based on data, that the BLS is the gold standard for employment statistics, and that the Fed uses a variety of sources but right now has every confidence in BLS data. On the FOMC, she noted there are some ‘more novel things’ happening, including the first-time effort to fire a governor, according to Reuters.
Fed’s Barkin (2027 voter) said a modest amount of tariff costs are paid by the consumer, adding that economic uncertainty is starting to lift but firms remain cautious to invest. On business confidence, he said optimism has ticked back up. On the labour market, he said low unemployment, wage gains and stock prices are all supporting consumer spending, expects the current low-hiring, low-firing jobs market to continue though it could break in either direction, and sees workforce growth this year close to flat. On inflation, he said wage pressures are coming down, according to Reuters.
Fed’s Musalem (2025 voter) said Congress has recognised the value of an independent central bank and protected it against political dominance, adding there is more awareness and debate about Fed independence. On policy, he said he supported last week’s 25bps cut as a precautionary move to help the labour market but sees limited room for further easing, stressing that monetary policy must continue to lean against inflation that remains above target. He said loose financial conditions and other factors mean the Fed should move cautiously on further cuts, though he would support more if signs of labour market weakness emerge provided risks of persistent inflation and rising inflation expectations have not increased. On the labour market, he warned that overemphasis could lead to policy that is too loose and do more harm than good, said the economy is near full employment, and that the recent cut should help maintain that. On trade, he said many things are driving inflation and tariffs are only one of them, but that tariffs are adding to inflation and their impact on prices has not yet been fully felt; he expects the effect of tariffs on inflation to fade after two or three quarters. On other issues, he said it is important to only use QE to support the dual mandate and not be perceived as helping government debt management, and noted that bankers say conditions are good right now, according to Reuters.
Fed’s Bostic (2027 voter) said inflation concerns make him hesitant for now to declare support for cutting rates again in October, adding that risks of weaker employment outcomes have increased though years of elevated inflation remain a serious concern. He said the current moment is one of the most difficult for policymakers as risks to both sides of the mandate are rising, and he does not expect inflation to return to the 2% target until 2028, according to the WSJ.
US Treasury Secretary Bessent said he will interview two more Fed candidates later this week, bringing the total to 10 of 11 candidates interviewed by the end of next week; he added he will begin interviewing existing Fed board members and regional bank presidents now that the FOMC quiet period has ended, and will start narrowing the list of interviewed candidates by next week; when asked if he is a Fed chair candidate, he said President Trump likes him at the Treasury, according to Reuters.
TARIFFS/TRADE
The White House said US President Trump will sign a TikTok deal later this week, according to Reuters.
US President Trump is set to approve a TikTok deal via executive order this week, with the US administration deeming the agreement legally compliant, according to the WSJ.
India’s Foreign Minister said it was good to meet Secretary Rubio in New York, adding that the conversation covered a range of bilateral and international issues of current concern, and that Rubio agreed on the importance of sustained engagement to progress on priority areas, according to Reuters.
DATA RECAP
US National Activity Index (Aug) -0.12 (Prev. -0.19, Rev. -0.28)
Canadian Producer Prices MM (Aug) 0.5% vs. Exp. 0.2% (Prev. 0.7%)
Canadian Producer Prices YY (Aug) 4.0% (Prev. 2.6%)
Canadian Raw Materials Prices MM (Aug) -0.6% (Prev. 0.3%)
Canadian Raw Materials Prices YY (Aug) 3.2% (Prev. 0.8%)
FX
The Dollar started the week on the back foot as newsflow was light to start the week. Tier 1 releases were absent, but will resume on Tuesday with S&P Global Flash estimates for PMIs for September due.
G10 FX strength was led by the GBP and EUR, while the CAD pared its outperformance on Friday.
EMFX: ARS surged against USD after US Treasury Secretary Bessent announced “all options are on the table” for the US to support Argentina’s government.
FIXED INCOME
US Treasuries were little changed after last week’s Fed rate cut, with the complex trading mixed throughout the session as traders continue to digest the rate reduction, amid heavy Fed commentary.
COMMODITIES
Crude complex settled little changed amid a generally cautious tone.
An Iraqi oil ministry delegation and the Kurdish regional government agreed an initial deal with foreign oil firms to restart exports via pipeline to Turkey, with the preliminary agreement to resume Iraqi Kurdistan oil exports pending cabinet approval on Tuesday, according to two oil officials cited by Reuters.
GEOPOLITICAL
NATO-RUSSIA
Russian President Putin said new risks are appearing, the system of nuclear arms control has been destroyed, and the situation of strategic stability continues to deteriorate, much of it linked to the West’s actions. He added that Russia is able to respond to threats, is not interested in an arms race, and is ready to stick to the New START Arms Treaty a year after it expires if the US does the same, saying Russia’s initiative could facilitate strategic dialogue with the US, according to Reuters.
The White House said US President Trump is aware of Russia’s New START Treaty offer, according to Reuters.
EU’s Kallas said it is no accident that Russia violated European air space three times in two weeks, adding that Russia is testing European borders and undermining its security, and will continue to provoke as long as it is allowed to do so, according to Reuters. EU’s Kallas said if Russian planes are violating air space every country has right to defend itself.
The Kremlin dismissed alleged violations of airspace by Russian jets, calling the claims baseless and aimed at escalating tensions, according to Reuters.
RUSSIA-UKRAINE
Russia’s Defence Ministry said its forces have taken control of Kalynivske in Ukraine’s Dnipropetrovsk region, via RIA.
MIDDLE EAST
Preparations are underway to arrange a meeting between Iran’s Foreign Minister Araghchi and E3 foreign ministers, according to France24 on X.
A meeting between E3 foreign ministers and Iran’s Foreign Minister could take place on Tuesday, according to the WSJ reporter Laurence Norman.
Iran’s Foreign Minister said Tehran will not respond to the language of pressure over its nuclear work, adding that it is time for the West to choose between ‘cooperation or confrontation’, and that Iran believes diplomacy can resolve its nuclear dispute with the West, according to State TV.
The Lebanese newspaper Al-Akhbar quoted senior Egyptian officials as saying that although Egypt has shown indirect readiness for the possibility of a military confrontation with Israel, according to Kan’s Kais on X.
Hamas leaders have not yet signed a letter but may do so in the coming days, with a source saying Hamas does not believe a comprehensive deal is possible at the moment and wants to return to a partial deal as a first step, according to Axios’ Ravid.
OTHERS
The White House said US President Trump will meet with the UN Secretary General and leaders of Ukraine, Argentina and the EU at the UN, and will also hold a multilateral meeting with Qatar, Saudi Arabia, Indonesia, Turkey, Pakistan, Egypt, the UAE and Jordan, according to Reuters.
US lawmakers are set to meet with China’s Defence Minister in Beijing, according to a Pool Report.
ASIA-PAC
NOTABLE HEADLINES
PBoC Governor Pan said China will use various policy tools based on the economic situation and will be data driven, adding that the country has an ‘appropriately accommodative policy stance’. He said China has ensured there are no systemic financial risks, the domestic financial system is sound, and that the press conference will not involve short-term policy adjustments. He pledged support for high-quality economic growth, noted that local government financing platform debt has fallen over 50% versus 2023 levels, and said the PBoC will strengthen monitoring and early warning of financial risks as well as measures against financial corruption, according to Reuters.
EU/UK
NOTABLE HEADLINES
The UK and US will create a taskforce to boost collaboration on digital assets and reduce the burden on UK and US firms raising cross-border capital, with the taskforce expected to report back in 180 days, according to Bloomberg.
ECB’s Nagel said the current EUR valuation does not worry him, according to Reuters.
ECB blog: Consumers expect tariffs to adversely affect inflation, household finances and economic growth, adding that in response to tariff-related concerns consumers are altering their spending habits in notable ways, with approximately 26% of respondents reporting switching away from US products and around 16% indicating they have reduced overall spending.
DATA RECAP
EU Consumer Confid. Flash (Sep) -14.9 vs. Exp. -15.3 (Prev. -15.5)
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