• Japanese PM Ishiba said he has decided to resign as LDP president and gave instructions to hold an emergency LDP leadership election; LDP is making final arrangements for a leadership vote on October 4th, according to TBS.
• US President Trump said Waller, Warsh and Hassett are the three finalists for the Fed chair nomination.
• US-China trade talks have reportedly made little progress towards a deal, and an impasse was hit on the fentanyl issue, according to WSJ.
• Eight OPEC+ members agreed to raise the oil production by 137k bpd in October (as touted), citing a steady global economic outlook and current healthy market fundamentals.
• European equity futures indicate a higher cash market open with Euro Stoxx 50 futures up 0.4% after the cash market closed with losses of 0.5% on Friday.
• Looking ahead, highlights include German Industrial Output (Jul), Trade Balance (Jul), EZ Sentix Index (Sep), US Employment Trends (Aug) & NY Fed SCE.

US TRADE

EQUITIES

• US stocks were choppy and the indexes ultimately finished mixed after another weak US jobs report in which the headline print missed analyst expectations at 22k, with three of the last four months printing below the breakeven estimate. The data confirmed the labour market concerns after the July jobs report, alongside rising initial claims and falling JOLTS, which cemented expectations for a 25bps rate cut in September and bolstered rate cut bets through year-end, while stocks initially rallied on the report on the prospects of more Fed easing, but then sold off after the opening bell as fears over the state of the economy took focus.
• SPX -0.32% at 6,482, NDX +0.08% at 23,652, DJI -0.48% at 45,401, RUT +0.48% at 2,391.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump criticised EU fines on tech companies on Friday and said this cannot be allowed to stand, while he warned that if it does stand, they will be forced to start a Section 301 proceeding to nullify the unfair penalties being charged to these taxpaying American companies.
• US President Trump is to direct Japan's USD 550bln investment in the US after the deal with Tokyo, according to a report in the FT on Friday, which cited a memo that gives Japan 45 days to fund projects earmarked by Trump or face the reimposition of his steep tariffs.
• Japan’s trade negotiator Akazawa said he cannot say the trade issues with the US have been resolved, while he added that a US presidential order on auto tariffs was issued, but there are no orders yet on the most favoured nation status for pharmaceuticals and semiconductors.
• US-China trade talks have reportedly made little progress towards a deal, and an impasse was hit on the fentanyl issue, while senior China negotiator Li Chenggang’s trip to Washington suggests that China is attempting to keep talks open but is not willing to give any ground, according to WSJ.
• European Council President said the EU and US President Trump have "turned the page" on their prior "rocky" relationship, according to the FT.

NOTABLE HEADLINES

• US President Trump said Waller, Warsh and Hassett are the three finalists for Fed chair nomination. In relevant news, White House’s Hassett said Fed monetary policy needs to be fully independent of political influence, including from President Trump, according to a CBS News interview.
• Fed's Goolsbee (2025 voter) said on Friday that he is still undecided on the September decision and needs to assess the inflation side of the mandate, while he wants to make sure that the services inflation uptick is a blip, according to a Bloomberg interview.
• US President Trump signed Executive Orders on Friday regarding changing the name of the Department of Defense to the Department of War, and on ordering penalties against countries complicit in holding wrongfully detained Americans.
• Disruptions to Microsoft (MSFT) Azure cloud services were reported due to multiple undersea fibre optic cables being cut in the Red Sea, although the cause of the damage wasn’t specified, while network traffic that does not traverse through the Middle East is not impacted.

APAC TRADE

EQUITIES

• APAC stocks began the week mostly positive but with some of the gains capped amid several key market themes, including last Friday's disappointing US jobs data and the subsequent boost in Fed rate cut bets, as well as Japanese PM Ishiba's resignation announcement and the latest Chinese trade data.
• ASX 200 was dragged lower by weakness in energy, utilities and financials, while participants also reflect on the latest Chinese trade data.
• Nikkei 225 outperformed amid a weaker currency and as the political uncertainty following Japanese PM Ishiba's resignation, was seen as potentially delaying the BoJ resuming its rate hikes, while upward revisions to Q2 GDP added to the heightened risk appetite in Tokyo.
• Hang Seng and Shanghai Comp were ultimately positive but with cautiousness seen amid the latest Chinese trade data in which exports and imports missed forecasts, while there was also a recent report that US-China trade talks have made little progress towards a deal, and an impasse was hit on the fentanyl issue.
• US equity futures traded rangebound and regained some composure after last Friday's post-NFP selling pressure.
• European equity futures indicate a higher cash market open with Euro Stoxx 50 futures up 0.4% after the cash market closed with losses of 0.5% on Friday.

FX

• DXY traded rangebound after weakening in the aftermath of last Friday's disappointing jobs data, which boosted Fed rate cut bets with money markets fully pricing in at least a 25bps cut at the Fed meeting on September 17th and a slight off chance for a 50bps move. Nonetheless, price action was mostly quiet to start the week amid the Fed blackout period and with US CPI and PPI data due later in the week.
• EUR/USD was sideways after quiet pertinent newsflow and with French PM Bayrou’s government expected to fall in a vote of confidence scheduled later today.
• GBP/USD lacked direction with price action contained near the 1.3500 level amid a very light calendar for the UK for most of the week until Friday's monthly GDP and output data.
• USD/JPY climbed above the 148.00 level amid political uncertainty after PM Ishiba announced his resignation, although the yen is off its worst levels as participants also digested the stronger-than-expected revised GDP data.
• Antipodeans lacked firm conviction as participants digested the weaker trade data from Australia and New Zealand's largest trading partner.
• PBoC set USD/CNY mid-point at 7.1029 vs exp. 7.1317 (Prev. 7.1064)
• SNB Chairman Schlegel said there is a high bar to the next interest rate cut, according to Migros-Magazin. It was separately reported that Schlegel said he is aware of undesirable effects of negative rates, while he added that US tariffs raise uncertainty and have a negative impact on the economy.

FIXED INCOME

• 10yr UST futures continued to partially fade last week's post-NFP surge but with the pullback gradual as markets fully price in a Fed cut this month.
• Bund futures gave back some of the recent gains after failing to sustain a brief return to above the 129.00 level and following a quiet weekend of newsflow from the bloc, while German trade and industrial production data loom.
• 10yr JGB futures were marginally higher as the political uncertainty from PM Ishiba's resignation is seen as potentially delaying a resumption of BoJ's rate normalisation, although the upside was limited following the upward revisions to Q2 GDP data and little reaction was seen following firmer demand at the latest enhanced liquidity auction for short to long-end JGBs.

COMMODITIES

• Crude futures gained following the decision by OPEC+ members to continue hiking production for October, albeit at a slower pace of increase of 137k bpd (as touted), while Goldman Sachs kept its Brent/WTI price forecast unchanged for 2025 and noted that the decision to start gradually unwinding the 1.65mln bpd of cuts likely reflects that OECD commercial stocks remain low.
• Eight OPEC+ members agreed to raise the oil production by 137k bpd in October (as touted), citing a steady global economic outlook and current healthy market fundamentals, while the next meeting is to be held on October 5th.
• OPEC Secretary General said projections indicate OPEC+ under the leadership of OPEC members will increase production from 49mln bpd to around 64mln bpd by 2050.
• Iraq’s PM said they will make arrangements to facilitate the entry of oil majors into Iraq, and they are in talks with ExxonMobil (XOM) on major energy projects, while Iraq hopes fellow producers will reconsider its oil export quota to better reflect its production capacity.
• Iraq’s SOMO and Oman’s OQ signed two MOUs on oil storage and Iraqi oil trading, while one MOU includes developing an integrated crude oil storage project in Oman’s Raz Markaz with an initial capacity of 10mln bbls.
• Russia’s Novak said they discussed 7-month OPEC+ compliance, which is high, and they agreed to monitor the market further, while he added the market is balanced and Russia is fully compliant with the OPEC+ deal.
• ADNOC is said to mull USD 10bln plus financing for the Santos (STO AT) deal, according to Bloomberg.
• Italy’s Energy Minister said there is no plan to dismantle coal-fired plants in continental Italy by year-end, and they are relaxed about the level of gas storage filling in Italy and in Europe, while the official added that US suppliers are currently offering LNG at a competitive price.
• Spot gold traded rangebound after climbing in the aftermath of last Friday's jobs data owing to a weaker dollar and Fed rate cut bets.
• PBoC purchased gold in August for 10th month in a row, according to data cited by Reuters.
• Copper futures attempted to nurse some of last Friday's losses but with the recovery limited as participants digest disappointing Chinese trade data.

CRYPTO

• Bitcoin traded indecisively in which prices oscillated around the USD 111k level.

NOTABLE ASIA-PAC HEADLINES

• Japanese PM Ishiba said he has decided to resign as LDP president and gave instructions to hold an emergency LDP leadership election, while he will continue to carry out responsibilities until a new leader is elected and thought it was the right timing to step down given the conclusion of the Japan-US trade agreement. Furthermore, he said the party will decide on the schedule for the leadership race and he will not run in the LDP leadership race.
• Japan LDP's Aizawa said they are to set the LDP leadership election date on Tuesday, while it was separately reported that the LDP is making final arrangements for a leadership vote on October 4th, according to TBS. Furthermore, Japanese Chief Cabinet Secretary Hayashi intends to run in the next LDP presidential election and former Foreign Minister Motegi also revealed his intention to run in the next LDP presidential election.
• South Korea’s Foreign Minister said over 300 Koreans were detained by US authorities at the Hyundai plant and President Lee ordered all-out efforts to respond to the arrest of Korean nationals. However, it was later reported that South Korea said a deal was reached with the US to release workers in the Hyundai Motor raid, according to WSJ.
• China is preparing to reopen its domestic bond market to major Russian energy companies, according to FT.

DATA RECAP

• Chinese Trade Balance (USD)(Aug) 102.3B vs. Exp. 99.2B (Prev. 98.24B)
• Chinese Exports YY (USD)(Aug) 4.4% vs. Exp. 5.0% (Prev. 7.2%)
• Chinese Imports YY (USD)(Aug) 1.3% vs. Exp. 3.0% (Prev. 4.1%)
• Chinese Trade Balance (CNY)(Aug) 732.7B (Prev. 743.6B)
• Chinese Exports YY (CNY)(Aug) 4.8% (Prev. 8.0%)
• Chinese Imports YY (CNY)(Aug) 1.7% (Prev. 4.8%)
• Japanese GDP Revised QQ (Q2) 0.5% vs. Exp. 0.3% (Prev. 0.3%)
• Japanese GDP Rev QQ Annualised (Q2) 2.2% vs. Exp. 1.0% (Prev. 1.0%)

GEOPOLITICS

MIDDLE EAST

• US President Trump posted that he had warned Hamas about the consequences of not accepting a hostage deal and said this was his last warning.
• Hamas said it received some ideas from the US side through mediators to reach a ceasefire deal in Gaza.
• Israel’s Foreign Minister Saar said the war in Gaza can end tomorrow if hostages are released and Hamas lays down its arms, while he said establishing a Palestinian state would jeopardise Israel’s security and urged Denmark not to recognise a Palestinian state. It was also reported that Denmark’s Foreign Minister said they are not ready to recognise a Palestinian state but added Israel does not have a veto over any Danish recognition of a Palestinian state.
• Yemen’s Houthis targeted Israel’s Ramon Airport with drones, although operations at the airport were resumed following the drone strike from Yemen.

RUSSIA-UKRAINE

• Ukraine’s PM said the main building of the Ukrainian government was damaged by an enemy strike for the first time during the war and that firefighters were working to extinguish the blaze at the government building. In relevant news, Ukraine’s Air Force said on Sunday morning that Russia launched 805 drones and 13 missiles on Ukraine overnight, while it was separately reported that Ukraine attacked Russia’s Druzhba oil pipeline in the Bryansk region.
• Russian Defence Ministry said Russian forces took control of Khoroshe in Ukraine’s Dnipropetrovsk region and carried out strikes on Ukraine’s military-industrial complex and transport infrastructure facilities, according to TASS.
• US President Trump said he is ready to go to the second round of sanctioning Russia, while Trump commented on Friday that the Ukraine war will end, or there will be hell to pay, and they are working on security guarantees to Ukraine.
• US envoy to Ukraine said Russia’s latest strike on Kyiv is not a signal it wants to diplomatically end the war.
• US and the EU plan to discuss new Russia sanctions on Monday, according to AP News. European leaders will visit the US on Monday or Tuesday to discuss ways to end the war in Ukraine, according to the BBC.

GLOBAL NEWS

• Tensions rose in Istanbul as hundreds of Turkish police blocked access to the main opposition’s Istanbul headquarters following a court-ordered leadership change of the party’s local administration, according to Bloomberg.

EU/UK

NOTABLE HEADLINES

• Italy’s Economy Minister said the government sees 2025 GDP growth in line with its 0.6% target.