• Poland said its airspace was repeatedly violated by drones during today's attack by Russia on Ukraine; Poland shot down Russian drones after 'unprecedented airspace violation'. Polish PM Tusk says Poland asked to evoke Article 4 of NATO treaty.
• US President Trump reportedly asked the EU to hit China and India with 100% tariffs to pressure Russian President Putin to end the war.
• US judge temporarily blocked President Trump from removing Federal Reserve Governor Cook.
• European bourses started off stronger, but then slipped after Polish PM asks to evoke Article 4; Oracle +29% post-earnings.
• DXY is incrementally lower whilst Antipodeans lead.
• Bunds briefly bolstered by NATO remarks. Complex awaits US data and supply.
• Crude and gold rise as NATO member Poland downs drones above its territory.
• Looking ahead, US PPI (Aug), Wholesale Sales (Jul), Comments from SNB’s Schlegel, Supply from US.

TARIFFS/TRADE

• US President Trump reportedly asked the EU to hit China and India with 100% tariffs to pressure Russian President Putin to end the war, while a US official said that Washington was prepared to mirror any tariffs on China and India imposed by the EU, according to FT.
• US President Trump posted that India and the US are continuing negotiations to address trade barriers and he looks forward to speaking with his very good friend, Indian PM Modi, in the upcoming weeks, while Trump added that he feels certain that there will be no difficulty in coming to a successful conclusion for both nations.
• Indian PM Modi said he is confident India and US trade negotiations will pave the way for unlocking the limitless potential of the India-US partnership, while he added that their teams are working to conclude discussions at the earliest and he looks forward to speaking with US President Trump. It was separately reported that India and US officials are likely to have an exchange of trade delegations soon and an in-person meeting later in September, according to CNBC-TV18.
• US Supreme Court agreed to hear the Trump administration's appeal of the judicial ruling that invalidated most of President Trump's tariffs and it fast-tracked the appeal in the tariffs case.
• US Treasury Secretary Bessent is confident that the Supreme Court will back Trump tariffs, while he added there is a fallback tariff plan, though it is more cumbersome.

EUROPEAN TRADE

EQUITIES

• European bourses opened mostly firmer across the board, but sentiment has slipped on comments from the Polish PM who asked to evoke Article 4.
• European sectors hold a strong positive bias, and with those industries in the red only marginally so. Retail is by far and away the clear outperformer today, boosted by post-earning strength in Zara-owner Inditex (+7.5%); the Co. reported fairly in line metrics but saw a strong start to Autumn sales, which has boosted sentiment.
• US equity futures (ES +0.2%, NQ +0.1%, RTY -0.2%) are mixed, with the ES/NQ holding just above the unchanged mark whilst the RTY underperforms.
• Oracle +28%; headline metrics were not so great, but focus has been on the co. issuing a bullish cloud outlook that boosted AI infrastructure hopes, with Oracle's performance also lifting other AI-linked stocks, including Nvidia (NVDA) and Asian chip suppliers.
• Novo Nordisk +2.6%; cuts FY25 EBIT guidance, due to one off restructuring costs of DKK 8bln; also, to cut 9k jobs. Saxo Bank’s Falkencrone says “large layoffs don’t win prescriptions” and suggests that investors will now look for stronger capacity and faster launches.
• Meta (META) and TikTok win court fight against EU tech fees; "The General Court annuls the implementing decisions, while maintaining their effects for a provisional period."
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FX

• DXY paused overnight after strengthening on Tuesday in a rebound from the two-day post-NFP selling, despite the worse-than-feared BLS revisions. While the announcement that a US judge temporarily blocked US President Trump from removing Fed Governor Cook spurred little reaction as participants now await incoming inflation data including PPI data later, followed by CPI tomorrow. DXY resides in a 97.693-97.932 range at the time of writing.
• EUR lacked firm demand and eventually dipped beneath the 1.1700 handle after it recently gave up ground to the rebound in the dollar. The single currency was also not helped by the geopolitical backdrop with Poland responding to the violation of its airspace by Russian drones and with US President Trump reportedly calling for the EU to impose 100% tariffs on China and India to pressure Russian President Putin. On this, Polish PM Tusk said Poland asked to evoke Article 4 of NATO treaty; there is no reason to claim that Poland is in a state of war. EUR/USD trades in a 1.1683-1.1719 range.
• JPY took a breather after its recent oscillations through the 147.00 level with headwinds for the pair stemming from hawkish BoJ sources yesterday. During the European morning, the pair has been uneventful and moving in tandem with the buck, whilst focus has been firmly on geopolitics. USD/JPY trades on either side of its 50 DMA (147.52) in a 147.27-147.59 range.
• GBP continues to struggle for direction in European hours, after similar was seen during APAC hours following yesterday's price swings, whereby early upward momentum stalled just shy of the 1.3600 territory before reversing course. At home, UK PM Starmer’s "Budget board" is set to meet weekly and has been tasked with coordinating pro-growth policies in the run-up to the November 26 Budget and with keeping business and City leaders engaged, according to officials cited by the FT. GBP/USD resides in a 1.3512-1.3543 range.
• Antipodeans are holding an upward bias and largely moving in tandem with the buck after risk waned off best levels, with gains capped after softer-than-expected and deflationary Chinese CPI data.
• PBoC set USD/CNY mid-point at 7.1062 vs exp. 7.1359 (Prev. 7.1008)
• Click for a detailed summary
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FIXED INCOME

• USTs are softer, but only marginally. In a very thin sub five tick range which itself is almost entirely in Tuesday’s 113-07 to 113-20 band. The session ahead is theoretically headlined by PPI and then followed by supply; though, geopolitical events may take precedence. Supply is a 5yr tap, follows Tuesday’s 3yr auction which was well received overall though direct demand was a little soft. That aside, a US judge has ruled that Fed’s Cook cannot be fired for now, this means she will be partaking in the September FOMC policy announcement.
• A contained start for OATs. Largely unreactive to President Macron appointing a new PM, Sebastien Lecornu. His appointment has drawn huge criticism from the Right while those on the left, and particularly the Socialist Party (PS), haven’t been quite as animated, but still see the appointment as Macron going down a “path in which no Socialist will participate”.
• Bunds are firmer, propped up by some risk premia amid the overnight drone incident in Poland. In brief, several Russian drones entered Polish airspace and were intercepted by Polish defence systems. An incident that has since concluded, but Poland has referred the matter to NATO. We are now waiting to see what the response by NATO formally is, but the initial take appeared to be that as the incursion is not being treated as an attack. Bunds hit a 129.44 peak amidst the NATO commentary, before pulling back. Thereafter, German paper slipped into the 2040/2041 auction, which was ultimately mixed - pressure continued following the outing.
• Gilts are marginally firmer in quiet trade with UK specific catalysts light and focus on the above events. Gilts firmer by 20 ticks at most, lifted alongside the discussed Bund move, but have since reverted back to gains of just a handful of ticks in 91.36 to 91.58 parameters. Note, no real move on the morning’s DMO sale.
• UK sells GBP 4bln 4.00% 2031 Gilt: b/c 3.27x (prev. 3.1x), average yield 4.208% (prev. 4.517%), tail 0.2bps (prev. 0.5bps).
• Germany sells EUR 1.17bln vs exp. EUR 1.5bln 2.60% 2041 & EUR 602mln vs exp. EUR 1bln 4.75% 2040 Bunds.
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COMMODITIES

• Crude traded higher following recent geopolitical developments, including Israel striking Hamas officials in Qatar, while US President Trump reportedly asked the EU to hit China and India with 100% tariffs to pressure Russian President Putin to end the war in Ukraine. The focus of the day has been on Poland announcing it conducted a military operation to neutralise targets after its airspace was repeatedly violated by Russian drones attacking Ukraine. On this, Polish PM Tusk said Poland asked to evoke Article 4 of the NATO treaty; there is no reason to claim that Poland is in a state of war. Article 4 talks are meant for consultations when “a member country feels threatened.” WTI currently resides in a 62.72-63.44/bbl range while Brent sits in a USD 66.66-67.20/bbl range.
• Precious metals recovered overnight after retreating yesterday alongside a firmer buck despite dovish BLS revisions. Spot gold currently resides in a USD 3,620.14-3,655.06/oz range after printing fresh record highs on Tuesday at USD 3,674.69/oz.
• Mixed/flat trade across base metals with the dollar also uneventful whilst broader risk remains cautious amid geopolitics and ahead of US PPI. 3M LME copper resides in a USD 9,914.50-9,962.35/t range at the time of writing.
• US Private Energy Inventory Data (bbls): Crude +1.3mln (exp. -1.0mln), Distillates +1.5mln (exp. +0.0mln), Gasoline +0.3mln (exp. -0.2mln).
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NOTABLE DATA RECAP

• Norwegian Core Inflation YY (Aug) 3.1% vs. Exp. 3.1% (Prev. 3.1%)
• Italian Industrial Output MM SA (Jul) 0.4% vs. Exp. -0.1% (Prev. 0.2%); YY WDA (Jul) 0.9% (Prev. -0.9%, Rev. -0.7%)

NOTABLE EUROPEAN HEADLINES

• UK PM Starmer’s "Budget board" is set to meet weekly and has been tasked with coordinating pro-growth policies in the run-up to the November 26 Budget and with keeping business and City leaders engaged, according to officials cited by the FT.
• UK Chancellor Reeves has told her cabinet colleagues that government departments will have their access to the Treasury's emergency funds limited ahead of the budget, according to BBC sources. Note: "The GBP 9bln Treasury Reserve, designed to be used for "genuinely unforeseen, unaffordable and unavoidable pressures" has recently been used to fund higher public sector pay and compensation payouts", BBC writes.
• European Commission President von der Leyen announces a EUR 1.8bln package to boost European battery production. Will propose a new long-term trade instrument to replace the expiring steel safeguards. EU plans short-term rental law to boost housing affordability. Intend to implement a short-term rental law to bolster housing affordability.

NOTABLE US HEADLINES

• US President Trump is to crack down on pharmaceutical adverts on TV and social media, while he signed a memo requiring pharma ads to disclose all risks.
• US judge temporarily blocked President Trump from removing Federal Reserve Governor Cook.
• Apple (AAPL) announced AirPods Pro 3, Apple Watch Series 11, iPhone 17 and iPhone Air.
• BofA card spending (Aug): 1.7% Y/Y (1.8% in July). Consumer resilience contrasts soft labour data.
• US is considering severe restrictions on medicines from China, via NYT.
• US has warned of hidden radios that could be embedded in solar-powered highway infrastructure, according to Reuters sources.
• US employer health insurance costs are projected to rise about 9.2-9.5% in 2026, the steepest increase in at least 15 years, WSJ reports.
• US Commerce Secretary Lutnick floats taking a share of university patent money; US should get half the benefit from patients, via Axios.

GEOPOLITICS

MIDDLE EAST

• Israel's ambassador to Washington told Fox News if they can't eliminate Hamas leaders now, they will succeed next time.
• US President Trump said the attack on Hamas officials in Doha was a decision made by Israeli PM Netanyahu and not a decision made by himself, while he added that unilaterally bombing inside Qatar, which is a close ally of the US, does not advance Israel or America’s goals and he views Qatar as a strong ally and friend to the US.
• Algeria asked the UN Security Council to meet after Israeli strikes on Qatar.

RUSSIA-UKRAINE

• Ukraine's military said Kyiv was under a drone attack and air defence units are trying to repel strikes, while Ukraine's Air Force also warned that Russian drones entered Poland's airspace and that the city of Zamosk was under threat.
• Poland's Defence Minister said aircraft have deployed weapons against hostile objects and territorial defence forces have been activated for ground searches of downed drones, while it was later reported that Polish PM Tusk informed NATO Secretary General Rutte about actions they've taken regarding objects that violated their airspace.
• Poland's Army said Polish airspace was repeatedly violated by drones during today's attack by Russia on Ukraine and an operation was conducted to identify and neutralise the targets, while it noted the most vulnerable areas are the Podlaskie, Mazowieckie, and Lublin voivodeships. Polish Army said as a result of Russia’s attack on Ukrainian territory, there was an unprecedented violation of Polish airspace by drone-type objects and that this was an act of aggression that posed a real threat to the safety of citizens.
• Warsaw's main airport and the Rzeszow airport were closed due to unplanned military activity related to ensuring state security.
• Polish PM Tusk says Poland is ready to react to attacks and provocations, says there is no reason to panic; no reason for restrictions that would make citizens' lives difficult; situation seems to be under control now
• NATO is not treating the drone incursion into Polish territory as an attack; indications that it was an intentional incursion, at least six to ten drones entered Polish airspace, according to NATO sources cited by Reuters.
• NATO's North Atlantic Council meets today to review response to drones entering Polish airspace, according to the NATO spokesperson.
• European Commission President von der Leyen says sanctions discussions focus on accelerating phase-out of Russian fossil fuels, and considers extending oil sanctions to include shadow fleet and third-country entities.
• Belarus Defence Ministry says its air defence forces tracked drones that had lost their tracks; warned Poland and Lithuania of the approaches of drones.
• Polish President Nawrocki says Poland discussed the possibility of NATO Article 4.
• Polish PM Tusk says Poland asked to evoke Article 4 of NATO treaty; there is no reason to claim that Poland is in a state of war.

CRYPTO

• Bitcoin is a little lower and trades just shy above USD 112k, with Ethereum also posting losses and oscillates the USD 4.3k mark.

APAC TRADE

• APAC stocks followed suit to the mostly positive handover from Wall St, where the major indices shrugged off large downward job revisions and geopolitical escalation, to approach record levels.
• ASX 200 eked mild gains as outperformance in financials, tech and telecoms atoned for the losses in the mining and materials sectors.
• Nikkei 225 edged higher despite the recent hawkish source reports that the BoJ sees some chance of hiking this year, despite the political situation, with some officials even said to view that a hike could be appropriate as early as October.
• Hang Seng and Shanghai Comp gained with the Hong Kong benchmark led higher by strength in tech, while the mainland lagged after deflationary CPI data and with US President Trump said to have asked the EU to hit China and India with 100% tariffs to pressure Russian President Putin.

NOTABLE ASIA-PAC HEADLINES

• Japan's economic revitalisation minister Akazawa said wage gains should be prioritised over tax cuts.
• South Korea may scrap the plan for a capital gains tax rule revision, while it was separately reported that South Korea will establish 15 task forces made up of members from both the public and private sectors to lead individual projects aimed at creating new growth engines.
• China to make full use of proactive fiscal policy, via Xinhua.

DATA RECAP

• Chinese CPI MM (Aug) 0.0% vs. Exp. 0.1% (Prev. 0.4%); YY (Aug) -0.4% vs. Exp. -0.2% (Prev. 0.0%)
• Chinese PPI YY (Aug) -2.9% vs. Exp. -2.9% (Prev. -3.6%)