FOMC decision in focus, UK CPI in line – Above BoE target levels

EU mid-market update: China assault on Nvidia continues, ordering domestic tech firms to halt chip purchases; FOMC decision in focus; UK CPI in line - above BOE target levels.

Notes/observations

- European stocks mixed ahead of today’s FOMC decision, with a 25bp Fed rate cut fully priced; Dot plot guidance expected to shape ~150bp easing outlook over next year.

- Nvidia and NQ futures sold off after FT reported that China has ordered tech firms to halt Nvidia chip purchases. Since pared most of the losses.

- UK Aug CPI held at 3.8% y/y, complicating BOE rate-cut path; Markets price 40% chance of a Dec cut, with policy likely held until Nov 26th Autumn Budget. Sterling dipped marginally.

- Euro is trading near four-year highs as Fed cuts expected while ECB easing cycle seen over; Support around $1.175-1.178.

- German Finance Agency to announce Q4 2025 issuance tomorrow on Thurs, likely to lift Q4 issuance by €15B, with ~€12B in bonds.

- Political and trade risks linger: French PM in talks with Socialists; US-India relations improving; UK accepts permanent 25% US tariff on exports.

- Bitcoin returned to 4-week highs at ~$117K.

- Asia closed mixed with Hang Seng outperforming +1.8%. EU indices -0.5% to +0.4%. US futures mixed. Gold -0.7%, DXY +0.1%; Commodity: Brent -0.6%, WTI -0.5%; Crypto: BTC +1.1%, ETH 0.0%.

Asia

- Japan Aug Trade Balance: -¥242.5B v -¥510.8Be; Exports Y/Y: -0.1% v -2.0%e; Imports Y/Y:-5.2% v -4.1%e.

- Australia Aug Westpac Leading Index M/M: -0.04 v +0.13% prior.

- Singapore Aug Non-Oil Domestic Exports Y/Y: -11.3% v +0.8%e.

- New Zealand Q2 Current Account Balance (NZD): -3.7B v -2.7Be.

Europe

- UK Office for Budget Responsibility (OBR) said to be preparing to cut their estimates for productivity growth ahead of the November Budget. Chancellor Reeves to blame black hole on Tories.

Americas

- Pres Trump and wife Melania arrived in the UK on Tues eve for their State visit.

- White House NEC Dir Hassett: We're looking at 'Way north' of 3% growth. Noted that 10-year bond rate has come down enormously.

- House GOP leaders flipped some holdout votes on Friday's upcoming CR vote. holdouts were offered a pledge that language will be added to the CR "to roll back the block on tariff votes from March 31 to Dec or Jan 31".

Energy

- Weekly API Crude Oil Inventories: -3.4M v +1.3M prior.

Speakers/fixed income/fx/commodities/erratum

Equities

Indices [Stoxx600 +0.1% at 551, FTSE +0.2% at 9213, DAX +0.4% at 23408, CAC-40 0.0% at 7818, IBEX-35 +0.1% at 15168, FTSE MIB -0.5% at 4138, SMI -0.1% at 11999, S&P 500 Futures -0.1%].

Market focal points/key themes: European indices opened generally higher and remained upbeat through the early part of the session; markets looking ahead to Fed rate decision; among sectors leading the way higher are consumer discretionary and technology; lagging sectors include materials and utilities; focus on FOMC meeting later in the day; earnings expected in the upcoming US session include General Mills and Cracker Barrell.

Equities

- Consumer discretionary: PostNL [PNL.NL] +10.0% (updates 2028 targets at CMD); Moonpig [MOON.UK] +5.5-6.0% (AGM trading update).

- Energy: Centrica [CNA.UK] +2.5% (analyst upgrade).

- Healthcare: Novo Nordisk [NOVOB.DK] +1.5% (analyst upgrade).

- Industrials: Wacker Chemie [WCH.DE] -1.0% (analyst downgrade).

Speakers

- ECB Wage Tracker: Early signals suggest lower and more stable wage pressures in H1 2026.

- ECB's De Guindos (Spain) reiterated Council view that current rate is appropriate. No reason to intervene in Transmission Protection Instrument (TPI).

- Germany Chancellor Merz: Germany's freedom and economic prosperity under threat.

- Netherlands Debt Agency (DSTA) cut its 2025 borrowing requirements by €1.8B to €87.1B.

- Indonesia Central Bank Policy Statement noted that the decision to cut by 25bp was in-line with efforts to aid economic growth.

- Turkey Fin Min Simsek noted that its economic program was on track despite shocks; ‘Unbelievable’ amount of FX inflows observed. Current account deficit is no longer a concern; to be below 0.5% of GDP in coming years.

Currencies/fixed income

- USD was steady after exhibiting weakness on Wed. USD Index near 4-year lows with focus on the upcoming FOMC rate decision. Financial press has played up drama in the upcoming Fed decision on its independence and Lisa Cook controversy. FOMC expected to cut by 25bps later today to resume its easing path.

- GBP/USD held around 1.3640 area as Aug CPI reading came within consensus but remains elevated over the BOE inflation target. Data did little to jolt any expectations of another BOE rate cut on Thurs. Dealers noted underlying price pressures were becoming less sticky and that a cooling jobs market should then help keep inflation on a downward path.

- EUR/USD hovered near 4-year highs with focus on rate path divergence. The 1.20 level appears to be in-play. ECB officials have previously noted that a stronger Euro could further dampen inflationary expectations. Several EU countries are currently experiencing CPI well below the ECB 2% target.

- USD/JPY probed the 146.50 area on the back of further USD weakness.

- 10-year German Bund yield at 2.68% and 10-year Gilt yield at 4.62% 10-year Treasury yield: 4.02%.

Economic data

- (UK) Aug CPI M/M: 0.3% v 0.3%e; Y/Y: 3.8% v 3.8%e; CPI Core Y/Y: 3.6% v 3.6%e; CPI Services Y/Y: 4.7% v 4.8%e; CPIH Y/Y: 4.1% v 4.1%e.

- (US) Aug RPI M/M: 0.4% v 0.4%e; Y/Y: 4.6% v 4.7%e; RPI-X (ex-mortgage interest payments) Y/Y: 4.4% v 4.7% prior; Retail Price Index: 407.7 v 407.9e.

- (SE) Sweden Aug Unemployment Rate: 8.4% v 8.0% prior; Unemployment Rate (seasonally adj): 8.8% v 8.7%e.

- (AT) Austria Aug Final CPI M/M: 0.2% v 0.2% prelim; Y/Y: 4.1% v 4.1% prelim.

- (ID) Indonesia Central Bank (BI) cut the BI Rate by 25bps to 4.75%; not expected.

- (PL) Poland Sept Consumer Confidence: -8.3 v -13.1e.

- (ZA) South Africa Aug CPI M/M: -0.1% v +0.2%e; Y/Y: 3.3% v 3.6%e.

- (ZA) South Africa Aug CPI Core M/M: 0.1% v 0.1%e; Y/Y: 3.1% v 3.1%e.

- (UK) July ONS House Price Index Y/Y: 2.8% v 3.6% prior.

- (EU) Euro Zone Aug Final CPI Y/Y: 2.0% v 2.1% advance; CPI Core Y/Y: 2.3% v 2.3% advance; CPI M/M: 0.1% v 0.2% advance.

- (CY) Cyprus Aug CPI Harmonized M/M: 0.8% v 0.4% prior; Y/Y: 0.0% v 0.1% prior.

Fixed income issuance

(IN) India sold total INR210B vs. INR210B indicated in 3-month, 6-month and 12-month bills.

- (SE) Sweden sold total SEK17.5B vs. SEK17.5B indicated in 6-month and 9-month bills (GR) Greece Debt Agency (PDMA) sold €M vs. €250M indicated in 3.625% Jun 2035 GGB Bonds; Avg Yield: % v 3.24% prior; bid-to-cover: x v 4.75x prior.

Looking ahead

- (AR) Argentina Aug UTDT Leading Indicator: No est v 0.1% prior.

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (DE) Germany to sell combined €2.5B in 2048 and 2056 Bunds.

- 05:30 (PT) Portugal Debt Agency (IGCB) to sell €1.5-1.75B in 9-month and 12-month bills.

- 05:30 (PL) Poland to sell Fixed-rate Bonds.

- 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays).

- 06:00 (IE) Ireland July Property Prices M/M: No est v 0.9% prior; Y/Y: No est v 7.8% prior.

- 06:00 (RU) Russia to sell OFZ Bonds.

- 06:00 (EU) European Union to sell combined 3.0B in 3-month, 6-month and 12-month bills.

- 07:00 (US) MBA Mortgage Applications w/e Sept 12th: No est v 9.2% prior.

- 07:00 (ZA) South Africa July Retail Sales M/M: No est v 0.0% prior; Y/Y: 2.7%e v 1.6% prior.

- 07:00 (BR) Brazil Sept FGV Inflation IGP-10 M/M: 0.3%e v 0.2% prior; Y/Y: No est v 2.8% prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (CA) Canada July Int'l Securities Transactions (CAD): No est v 0.71B prior.

- 08:30 (US) Aug Housing Starts: 1.365Me v 1.428M prior; Building Permits: 1.370Me v 1.354M prior; Housing Starts M/M: -4.4%e v +5.2% prior; Building Permits M/M: +0.6%e v -2.8% prior.

- 09:45 (CA) Bank of Canada (BOC) Interest Rate Decision: Expected to cut Interest Rates by 25bps to 2.50%.

- 10:30 (US) Weekly DOE Oil Inventories.

- 11:30 (US) Treasury to sell 17-Week Bills.

- 12:00 (RU) Russia Q3 Consumer Confidence: No est v -8 prior.

- 12:00 (RU) Russia Aug PPI M/M: No est v 0.9% prior; Y/Y: No est v -0.3% prior.

- 13:00 (DE) ECB’s Nagel (Germany).

- 14:00 (US) FOMC Interest Rate Decision: Expected to cut Target Range by 25bps to 4.00-4.25%.

- 15:00 (AR) Argentina Q2 GDP Q/Q: 0.1%e v 0.8% prior; Y/Y: 6.5%e v 5.8% prior.

- 14:30 (US) Fed Chair Powell post rate decision press conference.

- 17:30 (BR) Brazil Central Bank (BCB) Interest Rate Decision: Expected to leave Selic Target Rate unchanged at 15.00%.

- 18:45 (NZ) New Zealand Q2 GDP Q/Q: -0.3%e v +0.8% prior; Y/Y: 0.0%e v -0.7% prior.

- 19:50 (JP) Japan July Core Machine Orders M/M: -1.5%e v +3.0% prior; Y/Y: 5.2%e v 7.6% prior.

- 21:00 (CN) China Aug Swift Global Payments (CNY): No est v 2.9% prior.

- 21:30 (AU) Australia Aug Employment Change: +21.0Ke v +24.5K prior; Unemployment Rate: 4.2%e v 4.2% prior; Full Time Employment Change: No est v +60.5K prior; Part Time Employment Change: No est v -35.9K prior; Participation Rate: 67.0%e v 67.0% prior.

- 23:30 (JP) Japan to sell 3-Month Bills.