• APAC stocks followed suit to the mixed performance stateside, where tech and communications outperformed following the Google antitrust ruling, and participants digested dovish data and Fed rhetoric.
• US President Trump said it is possible that someday tariffs will replace income tax.
• UK Chancellor Reeves dismissed forecasts of a GBP 50bln "black hole" in the public finances, despite higher borrowing costs and expected tax rises piling pressure on the chancellor ahead of the autumn Budget, according to the BBC.
• US President Trump said he will find out over the next week or so how good the relationship is with Russia, while he also commented that the US will help Poland protect itself with US soldiers to remain in Poland and will put more there if they want
• European equity futures indicate a mildly positive open with Euro Stoxx 50 futures up 0.1% after the cash market finished with gains of 0.6% on Wednesday.
• Looking ahead, highlights include Swedish CPIF (Aug), Swiss CPI (Aug), EZ Retail Sales, US ISM Services PMI (Aug), ADP National Employment (Aug), Challenger Layoffs (Aug), Jobless Claims, Atlanta Fed GDP, Canadian Trade Balance (Jul), BoE DMP, Senate Banking Committee to hold hearing for US President Trump's Fed nominee Stephen Miran, Federal Housing Press Conference "In the Matter of Lisa D. Cook", Speakers including ECB’s Cipollone, Fed’s Williams & RBA’s Hauser, Supply from Spain, France, UK & US.

US TRADE

EQUITIES

• US stocks closed mixed with the Nasdaq and S&P 500 led higher by outperformance in the Communication and Tech sectors, which was largely a function of the upside in Alphabet and Apple following the US court ruling that Google can keep its Chrome browser and is also not required to cease payments to AAPL and others for preloading Google products.
• Meanwhile, breadth was soft with the majority of sectors down and with small caps and the equal-weight S&P underperforming, while upside was seen in T-notes and the dollar was pressured following dovish data and Fed Speak.
• SPX +0.51% at 6,448, NDX +0.79% at 23,415, DJI -0.05% at 45,271, RUT -0.10% at 2,350.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump said it is possible that someday tariffs will replace income tax.
• US reportedly told countries not to back fuel emissions deal at the UN shipping agency, or face possible tariffs.
• Mexico and the US have established high-level implementation groups to monitor commitments and take actions in their own countries, according to a joint statement. This includes measures to counter cartels, strengthen border security, eliminate clandestine border tunnels, address illicit financial flows, enhance collaboration to prevent fuel theft, and efforts to stem the flow of drugs and weapons.
• China's Commerce Ministry announced anti-dumping duties on some types of US optical fibres, effective September 4th.
• German Chancellor Merz said he will shortly invite companies and stakeholders to the national steel summit and noted that businesses have been suffering from high tariffs, while he will also be entering into talks with car makers and auto suppliers to discuss the current sector challenges.

NOTABLE HEADLINES

• Fed's Beige Book stated most of the twelve Fed districts reported little or no change in economic activity since the prior Beige Book period, and four districts reported modest growth, while contacts frequently cited economic uncertainty and tariffs as negative factors.
• Fed's Kashkari (2026 voter) said inflation is still too high and the Fed is not done with work to bring inflation back to 2%, while he added the labour market is showing signs of cooling and the Fed is getting into a tricky situation with mandates. Furthermore, he said data suggests the economy is slowing and moving to a soft landing. Fed's Kashkari also commented that they have every reason to believe there will be a gentle cooling in the economy, and interest rates have some room to come down gently, while he is not forecasting a recession.
• Fed Governor nominee Miran said the main job of the central bank is to prevent depression and inflation, while he added that the composition of the Fed's balance sheet is an open question and independence of monetary policy is a critical element.
• Republican Senator Tillis said he would not consider a nominee to replace ousted Fed Governor Cook until the legality of US President Trump's move to fire her has been determined in court, according to Politico.

APAC TRADE

EQUITIES

• APAC stocks followed suit to the mixed performance stateside, where tech and communications outperformed following the Google antitrust ruling, and participants digested dovish data and Fed rhetoric.
• ASX 200 advanced with the gains led higher by outperformance in the top-weighted financial sector and with tech stocks inspired by US counterparts.
• Nikkei 225 outperformed despite light catalysts, although Japan's trade negotiator Akazawa is scheduled to visit the US from today, while he noted that administrative issues have been resolved and will continue to push for a presidential order for what has been agreed on tariffs.
• Hang Seng and Shanghai Comp were pressured following a report that China is said to consider curbs on stock speculation to foster steady gains, while US-China frictions resurfaced following US President Trump's comments during the Victory Day parade and with China announcing anti-dumping duties on optical fibre from the US.
• US equity futures traded rangebound overnight with participants awaiting the upcoming key data releases.
• European equity futures indicate a mildly positive open with Euro Stoxx 50 futures up 0.1% after the cash market finished with gains of 0.6% on Wednesday.

FX

• DXY traded rangebound after softening yesterday on the lower-than-expected US JOLTS data which showed a slight fall in the vacancy rate, while the number of unemployed workers exceeded available jobs for the first time since 2021. The data spurred a marginal boost to Fed rate cut bets, although participants now await today's ADP and Jobless Claims metrics ahead of tomorrow's NFP report. Furthermore, there were several Fed comments in which Waller reiterated his call for a September rate cut, but advocated for a data-dependent approach regarding cuts beyond the next meeting, while Musalem expects tariffs to work through the economy over two to three quarters, before fading, and Bostic still sees one rate cut this year as appropriate and didn't rule out a September cut given the upcoming jobs report and inflation data.
• EUR/USD traded little changed and continued to languish at the sub-1.1700 territory with little major catalysts for the single currency ahead of EU Retail Sales.
• GBP/USD took a breather following the prior day's rebound and after a slew of BoE comments did little to shift the dial.
• USD/JPY lacked conviction after a recent brief dip beneath the 148.00 level and in the absence of any tier-1 data releases.
• Antipodeans were contained with little reaction seen to the latest Australian trade data, as FX participants braced for the upcoming key events stateside.
• PBoC set USD/CNY mid-point at 7.1052 vs exp. 7.1405 (Prev. 7.1108).

FIXED INCOME

• 10yr UST futures took a breather after climbing on the back of soft JOLTS data and dovish rhetoric from several Fed officials, while participants look ahead to further data releases including ISM Services PMI and more job-related metrics later today, ahead of tomorrow's Non-Farm Payrolls.
• Bund futures marginally extended on gains after rebounding yesterday to back above the 129.00 level.
• 10yr JGB futures followed suit to the recent upside in global peers and were unfazed by a weaker-than-previous 30yr JGB auction.

COMMODITIES

• Crude futures remained subdued after declining yesterday on OPEC+ headlines with the group reportedly mulling another oil production hike at Sunday’s meeting but with the decision not yet made, while prices were also not helped by mixed private sector inventory data which showed a surprise build in headline crude stockpiles.
• US Private Energy Inventories (bbls): Crude +0.6mln (exp. -2mln), Distillates +3.7mln (exp. -0.6mln), Gasoline -4.6mln (exp. -1.1mln), Cushing +2.1mln.
• Russia's Energy Minister said Rosneft signed a deal on additional supply of 2.5mln tons of oil to China via Kazakhstan.
• Nigeria's Dangote refinery (650k BPD) gasoline-producing unit has gone offline due to catalyst leaks and technical issues and repairs are estimated to take two weeks, according to Reuters citing sources.
• Spot gold pulled back from the prior day's fresh record highs after benefitting from a weaker dollar and dovish tailwinds.
• Copper futures were pressured amid the mixed overnight risk appetite and underperformance in its largest buyer, China.

CRYPTO

• Bitcoin trickled lower after failing to sustain a brief return to above the USD 112k level.

NOTABLE ASIA-PAC HEADLINES

• China is said to consider curbs on stock speculation to foster steady gains, according to Bloomberg.
• India's GST council approved changes in the consumption tax rate with new lower rates to be effective from September 22nd.

DATA RECAP

• Australian Balance on Goods (Jul) 7,310M vs Exp. 5,000M (Prev. 5,365M)
• Australian Goods/Services Imports (Jul) -1.3% (Prev. -3.1%)
• Australian Goods/Services Exports (Jul) 3.0% (Prev. 6.0%)

GEOPOLITICS

MIDDLE EAST

• Hamas reiterated it is ready for a comprehensive Gaza deal through which all Israeli hostages are released.
• Two Israeli officials claimed US Secretary of State Rubio has signalled in private meetings that he doesn't oppose West Bank annexations and the Trump administration won't stand in the way, according to Axios.
• Israel reportedly conducted a strike on Hezbollah terrorist infrastructure in Ansariyah in southern Lebanon, according to Visegrad 24 via X.

RUSSIA-UKRAINE

• US President Trump said he will find out over the next week or so how good the relationship is with Russia, while he also commented that the US will help Poland protect itself with US soldiers to remain in Poland and will put more there if they want. Furthermore, Trump said he will be talking to Ukrainian President Zelensky shortly in the next days, as well as implied 2nd and 3rd phases of Russian oil sanctions.
• Russia said security guarantees sought by Ukraine are "guarantees of danger to the European continent". It was separately reported that a Russian Foreign Ministry spokeswoman said allegations of Russia being behind European Commission President Von der Leyen's plane incident is fake and paranoia.
• US Special Envoy Witkoff is in Paris ahead of Ukraine coalition meeting, according to Reuters citing two diplomatic sources.
• French President Macron said the Coalition of the Willing is ready to provide security guarantees to Ukraine if there is a ceasefire.
• North Korean leader Kim and Russian President Putin held a meeting in Beijing where Putin highly praised North Korean soldiers fighting in Kursk and Kim expressed thanks, while Kim told Putin that North Korea would continue to support Russia and the leaders reaffirmed they would keep bilateral relations at a high level, according to KCNA.

EU/UK

NOTABLE HEADLINES

• UK Chancellor Reeves dismissed forecasts of a GBP 50bln "black hole" in the public finances, despite higher borrowing costs and expected tax rises piling pressure on the chancellor ahead of the autumn Budget, according to the BBC. The report also noted that Reeves has two rules on government borrowing that she has repeatedly said are "non-negotiable", which are to get debt falling as a share of national income by the end of this parliament in 2029-30, and that day-to-day government costs will be paid for by tax income, rather than borrowing by 2029-30.