• US President Trump said interest rates should be three or four points lower, while he thinks he will name a new Fed chairman "a little bit early" and noted that he is down to three or four names.
• Fed's Goolsbee (2025 voter) said that Fed meetings coming up are live but added that he doesn’t like pre-committing on rates.
• Trump said he would like to do a second meeting with Russian President Putin almost immediately which would include Zelensky if the first meeting goes okay, but there may not be a second meeting if he feels it is inappropriate or if he does not get the answers he wants.
• APAC stocks were ultimately mixed despite the positive handover from Wall St, where the major indices extended on gains amid Fed rate cut hopes as money markets fully priced in a September rate cut.
• European equity futures indicate a flat cash market open with Euro Stoxx 50 futures U/C after the cash market finished with gains of 1.0% on Wednesday.
• Looking highlights include UK GDP (Jun/Q2), EZ Flash GDP (Q2) and Employment (Q2), US PPI (Jul), Jobless Claims, Norges Bank Policy Announcement; Speakers include Norges Bank Bache & Fed’s Barkin, Supply from US, Earnings from Applied Materials, JD,com, RWE & Antofagasta.

SNAPSHOT

• Click for the Newsquawk Week Ahead.

US TRADE

EQUITIES

• US stocks were higher on Wednesday and small caps continued to surge with outperformance in the Russell 2000 spurred by more dovish rate cut bets, which were bolstered by Treasury Secretary Bessent advocating for a 50bp move in September and with money markets now fully pricing in a 25bp rate cut in September.
• Meanwhile, Bessent announced that there are 11 candidates for Fed Chair, all of whom have now been named, although some suggested the interviewing of a wide range of candidates is a tactic to put pressure on the Fed as a lot of the candidates who have been interviewed are calling for lower rates and/or are critical of the Fed.
• SPX +0.32% at 6,467, NDX +0.04% at 23,849, DJI +1.04% at 44,922, RUT +1.98% at 2,328.
• Click here for a detailed summary.

TARIFFS/TRADE

• US announcement on pharma sector probe and tariffs are unlikely for a few weeks, according to Reuters citing sources who expect the Trump admin to announce the results of its national security investigation into semiconductors first, followed by the pharma announcement, putting it a few weeks away.
• Brazilian President Lula said they are not announcing reciprocity measures and want to avoid worsening relations with the US, while they are open to negotiating ethanol trade with the US.
• Brazil’s Vice President said the government will extend the programme that returns part of the exported value to all companies that ship to the US and will extend the deadline for exporters to defer tax payments under the drawback scheme for one year, while the plan will also include government purchases.
• US Secretary of State Rubio said the State Department took steps to revoke visas and impose visa restrictions on several Brazilian government officials.
• China and India are in talks to resume border trade after a five-year pause, according to Bloomberg.

NOTABLE HEADLINES

• US President Trump said interest rates should be three or four points lower, while he thinks he will name a new Fed chairman "a little bit early" and noted that he is down to three or four names.
• US President Trump signed a pharma Executive Order to fill the Strategic Active Pharmaceutical Ingredients Reserve with critical drug components and signed a space industry related Executive Order, while the White House also announced a revocation of the 2021 Executive Order on competition.
• Fed's Goolsbee (2025 voter) said economists are unanimous in the view that the Fed must be independent from political interference. Goolsbee added that tariffs are a stagflationary shock and he is uneasy about the view of tariffs as a one-time shock that creates only transitory inflation. Furthermore, he commented that Fed meetings coming up are live, but added that he doesn’t like pre-committing on rates.
• Fed's Bostic (2027 voter) said he still sees one rate cut in 2025 as appropriate and that one cut is predicated on the labour market staying solid. Bostic said it feels like they have the luxury today to wait to make a policy adjustment because the labour market remains strong, while he noted that small businesses are feeling much more stress than larger businesses.

APAC TRADE

EQUITIES

• APAC stocks were ultimately mixed despite the positive handover from Wall St, where the major indices extended on gains amid Fed rate cut hopes as money markets fully priced in a September rate cut.
• ASX 200 extended on record highs with utilities and financials leading the advances following earnings releases from the likes of Origin Energy and Westpac.
• Nikkei 225 pulled back from record highs and returned to beneath the 43,000 level with pressure seen amid profit taking, higher yields and a firmer currency.
• Hang Seng and Shanghai Comp were initially supported with earnings releases in focus including a jump in profits for Tencent Holdings, although gains were capped following weaker-than-expected loans and aggregate financing data from China which showed New Loans contracted for the first time since 2005.
• US equity futures were rangebound as they took a breather following yesterday's ascent and with participants awaiting Initial Jobless Claims and PPI data.
• European equity futures indicate a flat cash market open with Euro Stoxx 50 futures U/C after the cash market finished with gains of 1.0% on Wednesday.

FX

• DXY traded rangebound following the recent selling pressure which had coincided with a decline in US yields as markets fully priced in a 25bps rate cut for the September Fed meeting. Furthermore, there were some notable comments from officials, including Treasury Secretary Bessent, who called for a 50bps cut by the Fed to start a series of rate cuts, while Fed's Goolsbee noted that the upcoming meetings are live.
• EUR/USD lacked direction after having reclaimed the 1.1700 status but with further upside capped amid quiet newsflow from the bloc, aside from the call between Trump and European leaders, while participants now look ahead to EU GDP and Employment data.
• GBP/USD lingered around yesterday's best levels with a firm footing as the 1.3500 handle heading into UK GDP data.
• USD/JPY retreated to sub-147.00 territory amid the narrowing of US-Japan yield differentials and as risk sentiment in Tokyo received a reality check, while there were also comments on Tuesday from US Treasury Secretary Bessent about the BoJ being behind the curve and that he expects it to hike rates.
• Antipodeans remained afloat amid the mostly constructive mood, but with a choppy reaction seen after the latest Australian jobs data which showed Employment Change slightly missed forecasts but was solely fuelled by an increase in full-time work and the Unemployment Rate fell to 4.2% from 4.3%, as expected.
• PBoC set USD/CNY mid-point at 7.1337 vs exp. 7.1743 (Prev. 7.1350)
• BoC Minutes stated that ahead of the July meeting, some members felt the bank may already have provided enough support for the economy, but others felt further monetary policy support would likely be needed. BoC Minutes noted the Governing Council felt that the fundamental rewiring of the global trading system could be inflationary for some time, while the Governing Council agreed on the need to wait for more clarity before drawing firm conclusions.

FIXED INCOME

• 10yr UST futures marginally extended on its recent advances which were facilitated by a boost in Fed rate cut bets as money markets are fully pricing in a 25bps rate cut at next month's Fed meeting, while Treasury Secretary Bessent called for a series of rate cuts beginning with a more aggressive 50bps move in September.
• Bund futures took a breather following their mid-week resurgence, while prices remain beneath the 130.00 level ahead of EU employment and GDP data.
• 10yr JGB futures retreated despite the recent gains in global counterparts and the underperformance in Japanese stocks, with pressure being attributed to previous comments by Treasury Secretary Bessent who said the BoJ is behind the curve and he expects the BoJ to hike rates.

COMMODITIES

• Crude futures nursed the prior day's weakness after lows were seen alongside bearish crude inventories and as eyes remained on the Trump/Putin meeting, while the mild recovery in WTI and Brent crude futures was facilitated after support held at the USD 62/bbl and USD 65/bbl levels, respectively.
• Spot gold held on to yesterday's mild gains after recent dollar weakness and increased Fed rate cut bets.
• Copper futures remained afloat amid the mostly positive risk appetite but with the upside capped amid quiet catalysts.
• Chile's Codelco said the El Teniente accident caused a loss of 20,000 to 30,000 metric tons of copper, equivalent to USD 300mln, while it later stated that the El Teniente smelter is to restart on Thursday.
• US DoE announces actions to secure American critical minerals and materials supply chain in which it intends to issue notices of funding opportunities totalling nearly USD 1bln to secure the American critical minerals and materials supply chain.

CRYPTO

• Bitcoin was ultimately flat overnight after briefly breaching the 124k level to print a fresh record high.

NOTABLE ASIA-PAC HEADLINES

• South Korea is to extend fuel tax cuts by two months through to October 31st and it is to announce a restructuring plan for the country's struggling petrochemical sector.

DATA RECAP

• Australian Employment (Jul) 24.5k vs. Exp. 25.0k (Prev. 2.0k, Rev. 1.0k)
• Australian Full Time Employment (Jul) 60.5k (Prev. -38.2k)
• Australian Unemployment Rate (Jul) 4.2% vs. Exp. 4.2% (Prev. 4.3%)
• Australian Participation Rate (Jul) 67.0% vs. Exp. 67.1% (Prev. 67.1%)

GEOPOLITICS

RUSSIA-UKRAINE

• Russian President Putin reportedly appears ready to test new nuclear-armed, nuclear-powered cruise missiles even as he prepares for talks with US President Trump, according to US researchers and Western security sources cited by Reuters.
• US President Trump held a call with European leaders and Ukrainian President Zelensky, which he said was a very good call and "rate it a 10", while he will meet with Russian President Putin, then will call Zelensky and European leaders. Trump said there is a good chance of a second meeting and he would like to do a second meeting almost immediately which would include Zelensky if the first meeting goes okay, but there may not be a second meeting if he feels it is inappropriate or if he does not get the answers he wants. Furthermore, he said the first meeting is finding out what they are doing and a second meeting will be more productive, but warned that Russia will face consequences if the war is not stopped.
• US President Trump discussed with European leaders possible locations for a meeting between Zelensky, Trump and Putin after the Alaska summit, while locations include cities in Europe and the Middle East, according to Reuters citing sources.
• Germany said it will fund a USD 500mln package of military equipment and munitions for Ukraine sourced from the US, according to a NATO statement.
• Polish PM Tusk said they cannot allow the biggest powers to decide the fate of smaller countries without their participation and Russia wants to link a reduction in NATO troops in Poland to the talks about Ukraine, while he added It will be easier for Poland's opponents to "play us" if we are not united.
• US President Trump reportedly told those on Wednesday's call that he is willing to contribute US security guarantees for Ukraine with some conditions, via Politico citing sources; openness that helps explain the cautious European optimism. Guarantees which are seen as key by Europe and Ukraine. However, Politico caveats that Trump did not elaborate on what he meant by security guarantees, and would only make this commitment of the effort is not part of NATO.

OTHER

• North Korea said it will not sit down with the US and sees no point in South Korea and the US adjusting joint military drills. It was also reported that North Korean leader Kim's sister said North Korea has not removed propaganda loudspeakers and has no intention to do so, while the South Korean military said it stands by its previous announcement that North Korea had dismantled propaganda loudspeakers at some points on the border.

EU/UK

DATA RECAP

• UK RICS Housing Survey (Jul) -13.0 vs. Exp. -5.0 (Prev. -7.0)