US stocks were lower, and it was largely one-way traffic from the sell-off at the open, albeit on no particular headline driver.
The Dollar was firmer on Wednesday, attempting to pare some of the week’s losses so far; T-notes continued to trickle lower despite quiet newsflow.
Oil prices were firmer and saw gains throughout the session; Rosneftʼs oil refinery in Russiaʼs Novokuibyshevsk halted oil processing on September 20th following a drone attack.
Looking ahead, highlights include Japanese Services PPI, BoJ Minutes (Jul), PBoC MLF, supply from Japan.
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US TRADE
US stocks were lower, and it was largely one-way traffic from the sell-off at the open, albeit on no particular headline driver. Sectors were mixed but with a downside bias, as Energy was the clear sectorial outperformer and supported by the gains seen in the crude complex.
SPX -0.28% at 6,638, NDX -0.31% at 24,504, DJI -0.37% at 46,121, RUT -0.92% at 2,435
Click here for a detailed summary.
NOTABLE HEADLINES
US Treasury Secretary Bessent said the Fed has been too high for too long and is going into an easing cycle, adding he was surprised Fed Chair Powell has not signalled a destination for interest rates. He noted that the revision on jobs shows something was wrong, said he will hold many Fed interviews next week with a couple of candidates surprising her, and added the first round of interviews will be finished by the first week of October. He also said he is less concerned about a recession and believes there will be a substantial drop in inflation, according to Fox Business.
US President Trump said he has decided that no meeting with Congressional leaders could possibly be productive regarding the CR, according to Truth Social.
Fed’s Goolsbee (2025 voter) warned against a series of rate cuts, saying the jobs market is still mostly steady and solid, and added he is uncomfortable with overly frontloading cuts on the presumption that inflation will probably just be transitory; he said US President Trump’s trade policies were to blame for his reluctance to lower borrowing costs more aggressively, according to the FT.
Fed’s Daly (2027 voter) said further policy adjustments likely will be needed as the Fed works to restore price stability and provide needed support to the labour market; she fully supported the Fed’s 25bps rate cut last week, said risks to the economy had shifted and it was time to act, and emphasized that the Fed’s rate-path projections are not promises and will need to be assessed at each decision point, according to Reuters.
Intel (INTC) to ask Apple (AAPL) to invest as part of a comeback bid, Bloomberg reports
TARIFFS/TRADE
US President Trump is expected to sign the TikTok deal tomorrow, according to Semafor citing an official.
US warned European countries not to restrict air travel in violation of bilateral agreements, according to Reuters citing the Transportation Secretary.
European Commission President von der Leyen said she had a good and frank exchange with Chinese Premier Li Qiang, noting on trade that she appreciates China’s willingness to engage in a spirit of mutual understanding, according to a post on X.
US officially set reduced auto tariffs to 15% for the EU beginning August 1st, 2025, with changes including exemptions for sectors such as aircraft, aircraft parts, generic pharmaceutical drugs and ingredients, and certain metals and ores effective September 1st, according to Bloomberg.
US Treasury Secretary Bessent said rare earth minerals from China continue to flow and noted that aircraft engines could be leveraged in talks with China. He added that some chemicals could also be used as leverage in discussions and highlighted significant leverage points with China, including the IPO market, according to Reuters.
US opened 232 probe in to robotics, machinery and medical devices, according to Bloomberg
DATA RECAP
US New Home Sales-Units (Aug) 0.8M vs. Exp. 0.65M (Prev. 0.652M, Rev. 0.664M)
US New Home Sales Chg MM (Aug) 20.5% (Prev. -0.6%, Rev. -1.8%)
US MBA Mortgage Applications 0.6% (Prev. 29.7%)
US MBA 30-Yr Mortgage Rate w/e 6.34% (Prev. 6.39%)
FX
The Dollar was firmer on Wednesday, attempting to pare some of the week’s losses so far, as DXY printed a high of 97.926 against an earlier low of 97.22.
G10 FX was weaker across the board and fell victim to the surging Buck. AUD was the relative outperformer and showed just minor losses, and was due to the firm Australian CPI metrics overnight – Y/Y CPI rate climbed from 2.8% to 3.0% (exp. 2.9%), the top end of the RBA’s target range, with odds of a 25bps rate cut next week sitting at just 8%.
Cable printed a low of 1.3427, and was weighed on by aforementioned themes. No move was seen, but BoE Governor Bailey said there is still further room to cut rates, and the extent depends on the path of inflation.
EMFX was exclusively lower against the Greenback, ex-ARS, which continues to extend on gains with USD/ARS lower by c. 9.5% WTD, so far. In CEE, CNB held rates at 3.5%, as expected, in a unanimous decision.
FIXED INCOME
T-notes continued to trickle lower despite quiet newsflow.
US sold USD 70bln of 5yr notes; tail 0.1bps. High Yield: 3.710% (prev. 3.724%, six-auction average 3.959%). WI: 3.709%. Tail: 0.1bps (prev. 0.7bps, six-auction avg. 0.2bps). Bid-to-Cover: 2.34x (prev. 2.36x, six-auction avg. 2.36x). Dealers: 11.9% (prev. 8.8%, six-auction avg. 10.9%). Directs: 28.6% (prev. 30.7%, six-auction avg. 22.1%). Indirects: 59.4% (prev. 60.5%, six-auction avg. 66.9%)
UK sold GBP 4.75bln 4.375% 2030 Gilt: b/c 2.80x (prev. 3.15x), average yield 4.095% (prev. 4.022%), yield tail 0.4bps (prev. 0.1bps), price tail 1.6 ticks.
Italy sold EUR 2.5bln vs exp. EUR 2-2.5bln 2.10% 2027 BTP Short Term & EUR 3.75bln vs exp. EUR 2-2.5bln 1.10% 2031 and 2.40% 2039 BTPei.
Germany sold EUR 3.045bln vs exp. EUR 4.0bln 2.50% 2032 Bund: b/c 1.5x (prev. 1.2x), average yield 2.52% (prev. 2.46%), retention 23.88% (prev. 33.13%).
Oracle (ORCL) launched a USD 18bln investment-grade bond sale, according to Bloomberg.
COMMODITIES
Oil prices were firmer and saw gains throughout the session.
Rosneft’s oil refinery in Russia’s Novokuibyshevsk halted oil processing on September 20th following a drone attack, according to Reuters citing sources.
DATA RECAP
US EIA Weekly Crude Production 13.501M (Prev. 13.482M)
US EIA Weekly Crude Production Change, 19k bbl (Prev. -13k)
US EIA Weekly Crude Production Change, 0.14% (Prev. -0.10%)
US EIA Weekly Refining Util w/e -0.3% vs. Exp. -0.8% (Prev. -1.6%)
US EIA Weekly Gasoline Stk w/e -1.081M vs. Exp. 0.15M (Prev. -2.347M)
US EIA Weekly Dist. Stocks w/e -1.685M vs. Exp. -0.494M (Prev. 4.046M)
US EIA Weekly Crude Stocks w/e -0.607M vs. Exp. 0.235M (Prev. -9.285M)
US EIA Weekly Crude Cushing w/e 0.177M (Prev. -0.296M)
GEOPOLITICAL
MIDDLE EAST
US President Trump and US envoy Witkoff presented a Gaza peace deal plan to Arab leaders, and Trump’s Gaza peace plan reportedly received support from regional leaders, Axios sources said. Key points include the release of all remaining hostages, a permanent ceasefire, gradual Israeli withdrawal from all of the Gaza Strip, a post-war governing mechanism in Gaza without Hamas, a security force including Palestinians alongside soldiers from Arab and Muslim countries, Arab and Muslim funding for Gaza’s new administration and reconstruction, and some involvement of the Palestinian Authority, according to Axios.
French President Macron said that together with Germany and the UK, they have taken the decision to activate the SnapBack procedure, allowing the reimposition of sanctions on Iran, and emphasised that Iran must never obtain a nuclear weapon. He added that an agreement remains possible, with only a few hours left, and that it is up to Iran to meet the legitimate conditions set, according to Reuters.
French President Macron said Iran has not taken concrete steps to allow inspectors to return to nuclear sites, according to Al Arabiya.
A European diplomat said there were talks in New York yesterday that did not produce any new developments or results, while European sources said they expect the snapback procedure will continue as planned, according to WSJ’s Norman.
US President Trump promised Arab leaders he will not allow Israel to annex the West Bank, according to Politico.
Israel’s army has taken “another step” in the plan to occupy Gaza City, according to AlHadath citing Walla.
Iran has reportedly started to rebuild the missile sites targeted by Israel, according to Sky News Arabia citing AP.
US Middle East Envoy Whitkoff, when asked if there is a diplomatic path forward with Iran, said “we’re talking to them,” adding that Iran is in a tough position and that the US has a desire to negotiate with Iran, according to Reuters.
RUSSIA-UKRAINE
The Kremlin said US President Trump is a businessman attempting to pressure global markets into purchasing US oil and gas at elevated prices, while praising his desire to bring an end to the conflict. It added that the Russian army is advancing in Ukraine and that the dynamics on the frontline are obvious, according to Reuters.
The Kremlin said the Ukraine war is not an “aimless war” and that the idea Ukraine can win something back is “deeply mistaken”, according to Reuters.
The Kremlin said improved relations with the US are moving more slowly than it would like, adding that it wants to remove “irritants” in US ties and remains open to areas for profitable cooperation with the US, according to Reuters.
EU/UK
NOTABLE HEADLINES
BoE’s Greene said monetary policymakers have tended to look through supply shocks and may need to rethink this approach, adding that in the current environment they should offset supply shocks. She noted she is less concerned about a rapid decline in the labour market, said risks from trade persist but have abated somewhat, and highlighted that the risks to the inflation outlook have shifted to the upside. She added that the risks of weaker demand have not disappeared but in her view have diminished, according to a speech release.
BoE Governor Bailey said there is still further room to cut rates, the extent of which depends on the path of inflation.
French PM Lecornu said he is open to a tax on top earners and firms, according to BFM TV.
German Chancellor Merz said a true reform is needed to fund the German welfare system, adding that Germany will make a concrete proposal on pension system reform this year. He said Germany’s aviation costs need to be lowered and emphasised that the auto, steel and chemical sectors are key industries that must remain, according to Reuters.
Switzerland’s KOF cut its 2026 outlook due to deteriorating competitive conditions from US tariffs and ongoing heightened economic uncertainty, revising its GDP forecast to 0.9% from 1.5%; according to Reuters.
Czech CNB Repo Rate 3.5% vs. Exp. 3.5% (Prev. 3.5%)
DATA RECAP
German Ifo Expectations New (Sep) 89.7 vs. Exp. 92 (Prev. 91.6); Ifo Current Conditions New (Sep) 85.7 vs. Exp. 86.5 (Prev. 86.4); Ifo Business Climate New (Sep) 87.7 vs. Exp. 89.3 (Prev. 89)
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