US stocks saw slight strength to settle around highs as they saw a bid through the US afternoon and into the month/quarter-end, although the Russell 2000 did still close marginally in the red.
The Dollar saw slight losses on Tuesday heading into the month and quarter-end, with attention on Tuesday surrounding Fed speak, US data and Government shutdown.
T-Notes saw two-way action on mixed data before settling flat as the US government heads for a shutdown.
The US Labour Department clarified that the Weekly Jobless Claims report will not be released in the event of a government shutdown, according to Reuters.
The OPEC Secretariat firmly rejected media reports alleging that the G8 countries are planning to increase production by 500k bpd, calling the claims wholly inaccurate and misleading.
Looking ahead, highlights include New Zealand Building Consents, Australian AIG Index, Australian S&P Global Manufacturing PMI Final, Japanese Tankan Survey, South Korean Trade Balance Prelim, Japanese S&P Global Manufacturing PMI Final, Supply from Australia, Fed’s Logan, RBI Policy Announcement.
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SNAPSHOT
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US TRADE
US stocks saw slight strength to settle around highs as they saw a bid through the US afternoon and into month/quarter-end, although the Russell 2000 did still close marginally in the red. There was little headline driver for the paring of losses seen.
Sectors were mixed, but with a green bias, as Energy lagged and weighed on by the aforementioned oil prices, while Health sat atop of the pile and was supported by Pfizer (+6.5%), in the wake of a raft of Trump announcements. Spot gold reversed earlier losses to continue its ascent higher and printed a new ATH.
SPX +0.41% at 6,688, NDX +0.28% at 24,680, DJI +0.18% at 46,398, RUT +0.05% at 2,436
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NOTABLE HEADLINES
The US Labour Department clarified that the Weekly Jobless Claims report will not be released in the event of a government shutdown, according to Reuters.
US President Trump said “maybe a lot” of workers would be laid off in the event of a shutdown, according to Reuters.
US President Trump said on government spending that they are going to see what happens, noting he had a good discussion with Schumer and Jeffries. On a potential government shutdown, he said “we’ll probably have one,” adding that Democrats are taking a risk and that during a shutdown the government can cut benefits and take medical actions that are irreversible, according to Reuters.
USTR Greer, when asked whether the Trump administration has discussed taking a stake in NVIDIA (NVDA), said US President Trump would love a stake in every company that is doing well, according to Reuters.
Fed’s Goolsbee (2025 voter) said the US seems to be headed into a new wave of tariffs, while the labour market remains pretty steady, according to Reuters.
DATA RECAP
US CaseShiller 20 MM SA (Jul) -0.1% vs. Exp. -0.2% (Prev. -0.3%, Rev. -0.2%)
US CaseShiller 20 YY NSA (Jul) 1.8% vs. Exp. 1.6% (Prev. 2.1%, Rev. 2.2%)
US CaseShiller 20 MM NSA (Jul) -0.3%
US Monthly Home Price MM (Jul) -0.1% (Prev. -0.2%)
US Monthly Home Price YY (Jul) 2.3% (Prev. 2.6%, Rev. 2.7%)
US Chicago PMI (Sep) 40.6 vs. Exp. 43.0 (Prev. 41.5)
US JOLTS Job Openings (Aug) 7.227M vs. Exp. 7.185M (Prev. 7.181M, Rev. 7.208M). Vacancy Rate 4.3% (prev. 4.3%). Quits Rate 1.9% (prev. 2.0%)
US Consumer Confidence (Sep) 94.2 vs. Exp. 96.0 (Prev. 97.4)
US Texas Serv Sect Outlook (Sep) -5.6 (Prev. 6.8)
US Dallas Fed Services Revenues (Sep) -2.4 (Prev. 8.6)
TARIFFS/TRADE
EU Trade Commissioner Sefcovic said the EU and US are very soon going to propose post-2026 safeguard measures on steel, working with tariff-rate quotas to deal with global overcapacity, according to Reuters.
US President Trump said Eli Lilly (LLY) has been fantastic, warning that pharma companies will face an extra 5–8% tariff if no deals are made. He said drug pricing will have a huge impact on the mid-term elections and that on Pfizer (PFE), drug price lowering will be immediate, according to Reuters.
US President Trump said Pfizer (PFE) agreed to offer discounts, with the US paying the lowest price—50–100% off and in some cases more. He added that all US medications will be sold at most favoured nation prices and that Pfizer will offer all of its prescription medications to Medicaid at MFN prices, according to Reuters.
US FDA Chief said that if drugmakers equalise their prices, their applications will go to the front of the line, and if they build in the US, they will also move to the front of the line, according to Reuters.
USTR Greer said President Trump’s pharmaceutical tariff is aimed at ensuring that the most innovative drugs are produced in the US, according to the Economic Club of New York.
US Commerce Secretary Lutnick, on 232 investigations, said that while negotiations are ongoing, they are going to let it play out, according to Reuters.
USTR Greer said the US will always trade with China but needs to find a place where both countries are comfortable, adding that China’s reliance on exports is not sustainable and that trade should become more balanced. He said China’s “wolf warrior” ethos has leaked into US-China economic relations, noted that the average tariff of 55% on Chinese imports is the status quo, and added that the USTR will be fully functioning in the event of a government shutdown. He said US tariff revenues could reach USD 600bln to USD 1tln per year, according to Reuters.
US President Trump said other drugmakers will commit in the coming weeks to sell at most favoured nation prices, which will help bring Medicaid costs down. He added that medicines will be available for direct purchase on a US government website, according to Reuters.
CENTRAL BANKS
ECB Vice President Guindos said the current level of interest rates is adequate and that further decisions will be made on a meeting-by-meeting basis, according to Reuters.
ECB President Lagarde said the risks to inflation appear contained and that the ECB is well placed to respond if risks shift or new shocks emerge. She noted policymakers are navigating a more difficult environment than before, which may factor into decisions, according to Bloomberg.
SNB’s Schlegel said inflation is expected to rise slightly in the coming quarters, with indicators pointing to a stable situation and moderate growth. He added that uncertainty remains high and that pharmaceutical tariffs have “a bit” increased the downside risk, according to Reuters.
Fed’s Jefferson (voter) said that if labour force growth continues to slow it will impact GDP and the output gap, while uncertainty remains over the neutral rate. He affirmed that the Fed funds rate is the policy instrument, said the probability of hitting the effective lower bound has declined, and stressed the Fed stands ready to use all its tools to fulfil its mandate, according to Bloomberg.
Fed’s Collins (2025 voter) said it may be appropriate to cut rates again if data supports easing and that she backed the recent cut given risks to the Fed’s mandate. She said modestly restrictive policy is appropriate given inflation, though upside risks have waned. She noted worse outcomes for inflation and jobs cannot be ruled out, but her baseline outlook is relatively benign. She expects hiring to rebound once firms adjust to tariffs, sees inflation elevated into 2026 before easing, and warned labour demand could ebb and push unemployment higher, according to Reuters.
Fed’s Collins (2025 voter) said inflation risks remain and the Fed should focus on both sides of the mandate. She said the economy is complicated to read right now, noted the Fed did not lay out a preset path at the September FOMC, and said tariffs will feed through but the impact will be small. She added that long periods of high inflation can shift psychology and that concerns about labour market fragility have risen, according to Bloomberg.
BoE’s Lombardelli said the Bank may want to respond to temporary rises in inflation if they appear likely to have more persistent effects, according to BoE.
BoE’s Mann said inflation expectations drifting away from the 2% target means there is a lot more work to do. She stressed inflation has been far above target for a long time and the persistence scenario is playing out, but this does not preclude rate cuts on the horizon. She added she voted for a reduced QT pace to avoid excessive action in the middle of the curve, said reserves are closer than people think to the sloping end of demand, and favours the same amount of sales in each duration bucket, according to BoE.
FX
The Dollar saw slight losses on Tuesday as we come to month and quarter-end, with attention on Tuesday surrounding Fed speak, US data and Government shutdown.
G10 FX was broadly firmer vs. the Buck with AUD outperforming post-RBA, and closely followed by the Yen and its Kiwi counterpart.
For the Pound, UK Q2 GDP was better-than-expected Y/Y at 1.4% (exp. & prev. 1.2%), with Q/Q in line, and unchanged, at 0.3%. In BoE speak, Lombardelli said policymakers may want to respond to temporary rises in inflation if they think they may have more persistent effect.
FIXED INCOME
T-Notes saw two-way action on mixed data before settling flat as US government heads for shutdown.
COMMODITIES
The crude complex was lower and ultimately weighed on by OPEC sources, to which OPEC later refuted.
Kpler reporter Amena Bakr said the possibility of a sped-up increment from OPEC-8 is due to real barrels returning from the UAE and Saudi Arabia, noting that of the 1.65mln to be unwound, around 700k are real barrels, according to Kpler.
The OPEC Secretariat firmly rejected media reports alleging that the G8 countries are planning to increase production by 500k bpd, calling the claims wholly inaccurate and misleading. It said discussions among relevant ministers concerning the upcoming meeting have not yet commenced and urged media outlets to exercise accuracy and responsibility to avoid fuelling unnecessary speculation in the oil market, according to OPEC via X.
Reuters poll showed Brent is expected to average USD 67.61/bbl in 2025 (prev. USD 67.65/bbl), while WTI is forecast to average USD 64.39/bbl in 2025 (prev. USD 64.65/bbl).
Goldman Sachs expects a 140k bpd quota increase for November at Sunday’s OPEC+ meeting and said it is plausible the OPEC+8 quota could rise by more than that, according to Reuters.
OPEC+ is to discuss fast-tracking its latest round of supply hikes in three monthly instalments of about 500k bpd as it seeks to recoup market share, according to Bloomberg.
OPEC+ will reportedly consider a larger November oil output increase of 411k bpd at Sunday’s meeting and could discuss a hike as much as 500k bpd for November, according to Reuters citing sources.
Private inventory data (bbls): Crude -3.7mln (exp. +1.0mln, prev. -3.8mln), Distillate +3.0mln (exp. -1.1mln, prev. +0.5mln), Gasoline +1.3mln (exp. +0.7mln, prev. +1.1mln), Cushing -0.7mln (prev. +0.072mln)
GEOPOLITICAL
Russian Foreign Minister Lavrov said Russia does not believe a decision on Tomahawks has been taken, according to Reuters.
Hamas negotiators will meet officials from Qatar, Egypt, and Turkey on Tuesday evening in Doha to discuss a response to the Trump administration’s proposal to end the war in Gaza, CNN’s Treene reported.
China’s President Xi said China must “firmly oppose” the separatist act of “Taiwan independence,” firmly safeguard national sovereignty, and oppose interference by external forces, via local press.
US President Trump said there is not much room to negotiate with Hamas and that he will give Hamas three to four days to respond to his ceasefire proposal, according to Reuters.
US President Trump said it is necessary to get Russian President Putin and Ukrainian President Zelensky together, according to Reuters.
A diplomatic source told i24NEWS that the plan presented by President Trump is without negotiations and that “the answer should be yes or no,” while the US administration is signalling it may be ready for some kind of minimal but not lengthy negotiations. On the other hand, Qatar and Hamas said the plan is in fact an opening, via Jerusalem Post’s Stein.
EU/UK
NOTABLE HEADLINES
German Economy Minister said the Q3 slowdown is partly due to US tariffs, with problems continuing in the metals sector, according to Reuters.
Italy is set to forecast its 2025 budget deficit at or below 3% of GDP, in line with EU rules, according to Reuters citing sources.
Annual UK shop price inflation rose to 1.4% in September from 0.9% in August, according to the latest monthly report from the British Retail Consortium (BRC) and analysts NIQ, via the Guardian.
UK PM Starmer said economic growth is the antidote to division and stressed the need for firm and fair decisions to control debt, according to Reuters.
UK Chancellor Reeves said she cannot set out policies without explaining where the money will come from, adding that child poverty will be reduced in this Parliament and details will be laid out in the budget, according to Reuters.
UK Chancellor Reeves will lift the two-child benefit cap in the November budget, according to The Guardian.
BoE’s Breeden said the recent “hump” in inflation is unlikely to lead to additional inflationary pressure, noting that while the underlying disinflationary process looks on track, policymakers face a balancing act in managing the risks around the outlook. She said inflation this month is expected to peak at 4%, well above target, stressing it is too high and the BoE’s job is to return it sustainably. She added the hump reflects external shocks and is unlikely to create further pressures, and said she has not yet seen evidence that the underlying disinflationary process is veering off track. Breeden cautioned that the path ahead is uncertain, with risks on both sides, and stressed focus will be on indicators of wage and services price inflation, along with pricing intentions from surveys and BoE agents, as key signposts for when it might be appropriate to remove further restrictiveness, according to BoE.
DATA RECAP
UK GDP QQ (Q2) 0.3% vs. Exp. 0.3% (Prev. 0.3%); YY (Q2) 1.4% vs. Exp. 1.2% (Prev. 1.2%)
German Retail Sales YY Real (Aug) 1.8% vs. Exp. 1.8% (Prev. 1.9%); MM Real (Aug) -0.2% vs. Exp. 0.6% (Prev. -1.5%)
German Import Prices MM (Aug) -0.5% vs. Exp. -0.2% (Prev. -0.4%); YY (Aug) -1.5% vs. Exp. -1.4% (Prev. -1.4%)
French CPI (EU Norm) Prelim YY (Sep) 1.1% vs. Exp. 1.3%; MM (Sep) -1.1% vs. Exp. -0.90% (Prev. 0.50%)
Swiss KOF Indicator (Sep) 98.0 vs. Exp. 97.0 (Prev. 97.4, Rev. 96.2)
German Unemployment Chg SA (Sep) 14.0k vs. Exp. 8.0k (Prev. -7.0k); Rate SA (Sep) 6.3% vs. Exp. 6.3% (Prev. 6.3%)
German CPI Prelim YY (Sep) 2.4% vs. Exp. 2.3% (Prev. 2.2%); Core 2.8% (prev. 2.7%)
German CPI Prelim MM (Sep) 0.20% vs. Exp. 0.10% (Prev. 0.10%)
German HICP Prelim YY (Sep) 2.4% vs. Exp. 2.2% (Prev. 2.1%)
German HICP Prelim MM (Sep) 0.2% vs. Exp. 0.1% (Prev. 0.1%)
Italian CPI (EU Norm) Prelim YY (Sep) 1.8% vs. Exp. 1.7% (Prev. 1.6%); MM 1.3% vs. Exp. 1.1% (Prev. -0.2%)Italian Consumer Price Prelim YY * (Sep) 1.6% vs. Exp. 1.7% (Prev. 1.6%); MM -0.2% vs. Exp. -0.1% (Prev. 0.1%)
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