US stocks were rangebound and finished with marginal losses as traders awaited the pivotal FOMC meeting on Wednesday, where the Fed is widely expected to cut by 25bps, but there remains an outside risk of a larger cut, and the attention will also be on the accompanying commentary and updated SEPs. There were some data releases in the form of Retail Sales, which printed above expectations across the board, while Import/Export Prices came in hotter than expected, and Industrial Production unexpectedly rose in August, but did little to inspire, with markets cautious ahead of this week’s main risk event.
USD was pressured ahead of the FOMC with the DXY retreating to beneath the 97.00 level despite better-than-expected US Retail Sales and Industrial Production data.
Looking ahead, highlights include New Zealand Current Account, Japanese Trade Data, Australian Leading Index, Singapore Non-Oil Exports, Comments from RBA’s Jones, Supply from Australia & Japan.
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LOOKING AHEAD
Highlights include New Zealand Current Account, Japanese Trade Data, Australian Leading Index, Singapore Non-Oil Exports, Comments from RBA’s Jones, Supply from Australia & Japan.
Click for the Newsquawk Week Ahead.
US TRADE
US stocks were rangebound and finished with marginal losses as traders awaited the pivotal FOMC meeting on Wednesday, where the Fed is widely expected to cut by 25bps, but there remains an outside risk of a larger cut, and the attention will also be on the accompanying commentary and updated SEPs. There were some data releases in the form of Retail Sales, which printed above expectations across the board, while Import/Export Prices came in hotter than expected, and Industrial Production unexpectedly rose in August, but did little to inspire, with markets cautious ahead of this week’s main risk event.
SPX -0.13% at 6,607, NDX -0.08% at 24,274, DJI -0.27% at 45,758, RUT -0.09% at 2,403.
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TARIFFS/TRADE
US President Trump denied he compromised on 15% auto tariffs, while Trump also said the UK wants to discuss tweaks to the trade pact and he’s willing to listen.
US President Trump said he will be announcing the buyer for TikTok. It was also reported that the White House said it was further extending the TikTok enforcement delay, with the deadline to sell TikTok extended until December 16th.
US-China TikTok agreement is similar to the one worked out earlier this year, according to Reuters citing three sources.
TikTok deal would create a new US entity and would require US users to migrate to a new app, while ByteDance would own 20% of US TikTok, according to WSJ.
Chinese official said China and the US have discussed China’s concerns on the TikTok deal in the last couple of days and reached a basic framework on fixing issues related to the app through cooperation and reduced investment barriers, according to CBS.
US is reportedly to consider imposing new national security tariffs on additional imported auto parts, according to Reuters.
UK shelved hopes for 0% tariffs on steel exports to the US, and UK PM Starmer reportedly favours making permanent Britain’s preferential 25% rate, according to allies cited by the FT.
NOTABLE HEADLINES
US President Trump said he just signed Miran documents to move to the Fed.
US Treasury Secretary Bessent said regarding Fed’s Miran that the plan is for him to come back to CEA, according to CNBC.
US DoJ is to challenge ruling on Fed Governor Cook soon at the Supreme Court, according to NYT.
US House Republicans release draft bill which would fund the government through November 21st, while it was separately reported that the House is to vote on a seven-week funding bill on Friday, according to Punchbowl’s Sherman.
US is reportedly in talks to set up USD 5bln fund for minerals deals, according to Bloomberg.
DATA RECAP
US Retail Sales MM (Aug) 0.6% vs. Exp. 0.2% (Prev. 0.5%; Rev. 0.6%)
US Retail Sales Ex-Autos MM (Aug) 0.7% vs. Exp. 0.4% (Prev. 0.3%, Rev. 0.4%)
US Retail Control (Aug) 0.7% vs. Exp. 0.4% (Prev. 0.5%)
US Industrial Production MM (Aug) 0.1% vs. Exp. -0.1% (Prev. -0.1%, Rev. -0.4%)
US Manufacturing Output MM (Aug) 0.2% vs. Exp. -0.2% (Rev. -0.1%)
US Capacity Utilisation SA (Aug) 77.4% vs. Exp. 77.4% (Prev. 77.5%, Rev. 77.4%)
US Business Inventories MM (Jul) 0.2% vs. Exp. 0.2% (Prev. 0.2%)
US Export Prices MM (Aug) 0.3% (Prev. 0.1%, Rev. 0.3%)
US Import Prices MM (Aug) 0.3% vs. Exp. -0.1% (Prev. 0.4%, Rev. 0.2%)
Atlanta Fed GDPNow (Q3 25) 3.4% (prev. 3.1%)
FX
USD was pressured ahead of the FOMC with the DXY retreating to beneath the 97.00 level despite better-than-expected US Retail Sales and Industrial Production data.
EUR took advantage of the dollar’s demise, in which EUR/USD gained a firm footing at the 1.1800 handle and printed a fresh YTD high.
GBP edged higher after better-than-expected headline employment data but with gains capped as cyclical currencies somewhat lagged and ahead of UK CPI.
JPY strengthened with USD/JPY slipping to beneath 147.00 territory owing to the weaker buck, while participants also await the latest Japanese trade data.
Canadian CPI BoC Core YY (Aug) 2.6% vs. Exp. 2.7% (Prev. 2.6%)
Canadian CPI Inflation YY (Aug) 1.9% vs. Exp. 2.0% (Prev. 1.7%)
FIXED INCOME
T-notes settled marginally higher but with price action choppy after US data and ahead of the FOMC.
COMMODITIES
Oil prices gained with an uplift seen after it was reported that Transneft informed producers it is restricting oil storage in its systems and may limit oil intake, and that Russia could be forced to start cutting oil production.
US Private Inventory Data (bbls): Crude -3.4mln (exp. -0.9mln), Distillate +1.9mln (exp. +1.0mln), Gasoline -0.7mln (exp. +0.1mln), Cushing -0.4mln.
OPEC+ officials are to discuss methodology for assessing maximum production capacities in Vienna on Thursday and Friday, according to Reuters citing sources.
Russian oil pipeline monopoly Transneft tells producers it is restricting oil storage in its systems and may limit oil intake, according to Reuters citing sources that noted Russia could be forced to start cutting oil production.
Japan’s JERA reportedly in advanced talks to buy USD 1.7bln worth of US natural gas production assets, according to Reuters citing sources.
GEOPOLITICAL
MIDDLE EAST
Israeli military official said they started the main step of the Gaza City ground operation, while they will be increasing the amount of troops in Gaza City as the days go by.
Israel conducted strikes which targeted Hodeidah Port’s docks, according to Al-Masirah TV.
Qatari Foreign Ministry said Gaza negotiations do not seem realistic now, according to Al Hadath.
US issued fresh Iran-related sanctions, according to the Treasury Department website.
US President Trump warned that Hamas would be in “big trouble” if it used hostages as human shields.
RUSSIA-UKRAINE
US President Trump said Ukrainian President Zelensky is going to have to make a deal and that Europe has to stop buying oil from Russia, while he added that the problem is that NATO and EU nations are purchasing Russian oil. Furthermore, Trump said it looks like he will need to sit in a room with the Russian and Ukrainian presidents.
US President Trump’s administration clears the first Ukraine arms aid package paid for by allies, according to Reuters sources.
US President Trump posted on Truth “I had a wonderful phone call with my friend, Prime Minister Narendra Modi…Thank you for your support on ending the War between Russia and Ukraine!”
Indian PM Modi said, like US President Trump, he is also fully committed to taking the India-US comprehensive and global partnership to new heights, while he supports Trump’s initiatives towards a peaceful resolution of the Ukraine conflict.
CRYPTO
Binance reportedly nears a deal to escape the compliance monitor imposed by the DoJ, according to Bloomberg.
UK is set to announce closer co-operation on cryptocurrencies and UK Chancellor Reeves hopes greater regulatory alignment will allow better access to America’s deep capital markets, according to FT.
ASIA-PAC
NOTABLE HEADLINES
China is issuing measures on increasing consumption, in which it will launch a series of consumption promotion activities and will enhance the supply of quality services, while it will promote an orderly opening up of sectors, including the internet and cultures. China will expand pilots in telecoms, medicine and education sectors, as well as increase consumption credit support and will coordinate funding channels, including local government special bonds, for new cultural and tourism facilities.
EU/UK
NOTABLE HEADLINES
Office for Budget Responsibility (OBR) reportedly told UK Chancellor Rachel Reeves that it will downgrade productivity forecasts for the UK economy, according to CityAM.
Microsoft (MSFT) President said will invest over USD 30bln in the UK over the next four years, and will spend USD 15.1bln on UK operations, including London AI lab, gaming, and other work.
ECB’s Kazaks said the reduction in the ECB rates is already very significant.
ECB’s Scicluna said “there is no cut already in a box and just waiting to be unpacked” and there was nothing during the Council meeting “about leaving a rate cut for October or December”, according to Econostream via X.
DATA RECAP
UK Employment Change (Jul) 232k vs. Exp. 220k (Prev. 238k)
UK HMRC Payrolls Change (Aug) -8k (Prev. -8k, Rev. -6k)
UK ILO Unemployment Rate (Jul) 4.7% vs. Exp. 4.7% (Prev. 4.7%)
UK Avg Earnings (Ex-Bonus) (Jul) 4.8% vs. Exp. 4.8% (Prev. 5.0%)
UK Avg Wk Earnings 3M YY (Jul) 4.7% vs. Exp. 4.7% (Prev. 4.6%)
German ZEW Economic Sentiment (Sep) 37.3 vs. Exp. 26.3 (Prev. 34.7)
German ZEW Current Conditions (Sep) -76.4 vs. Exp. -75.0 (Prev. -68.6)
EU ZEW Survey Expectations (Sep) 26.1 (Prev. 25.1)
EU Industrial Production MM (Jul) 0.3% vs. Exp. 0.4% (Prev. -1.3%)
EU Industrial Production YY (Jul) 1.8% vs. Exp. 1.7% (Prev. 0.2%)
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