Stocks flat with quiet action elsewhere; USD moves lower into FOMC minutes - Newsquawk US Market Open

US President Trump is waiting for Iran to cave to his economic pressure, but Tehran may be willing to wait even longer, according to POLITICO.
A source close to Iran's negotiating team said there had been no direct Iran-US negotiations and that talks with Oman concerned sovereignty over the Strait of Hormuz, according to Fars News.
US President Trump announced that the US is to pause the 50% tariffs on Canada.
US equity futures muted; SK Hynix ADRs surge following share buyback announcement.
DXY lower; JPY outperforms while GBP follows despite a mixed inflation reading.
Fixed income benchmarks steady after recent steepening and rangebound energy prices (Brent +1.0%).
Looking ahead, highlights include FOMC Minutes (Jul). Comments from ECB's Lagarde, Fed's Musalem and US President Trump. Supply from the US. Earnings from Lowe's.

As of 10:45BST / 05:45EDT

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EUROPEAN TRADE

EQUITIES

European bourses are broadly lower, following on from the risk-off tone overnight as Asian chipmakers were weighed by the weakness stateside. Switzerland's SMI outperforms, supported by Geberit, after it reported strong results.
Sectors point to a mixed picture. Construction outperforms, with Energy and Retail rounding out the top 3 sectors. To the downside is Media, followed by Banks and Food, Beverages & Tobacco. The latter has been pressured by post-earning losses in Carlsberg (-3.7%) after its H1 EBIT missed consensus.
US equity futures initially started on the softer footing but reversed after updates from SK Hynix (+5.6% pre-market). The Co. announced plans to buyback KRW 40tln of stock and return over 50% of FCF to shareholders from its previous target of within 50%. Additionally, S&P upgraded SK Hynix's credit rating to 'A-' from 'BBB+', citing AI-driven operating strength. S&P added that operating performance is likely to continue to surge over the next two years on extremely favourable memory sales and robust profitability and operating cash flow. Traders look ahead to the FOMC minutes for potential impetus.
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FX

Focus on yields remain with the USD weaker against most G10 peers today as bonds stabilise around recent lows; the oil story is similar, Brent remaining above USD 90/bbl. Action this morning has been isolated to FX, USD weakness emerging against all peers without a clear driver, EUR/USD rising back above 1.16 while Cable breached 1.3550, DXY below 99.50, familiar levels in recent sessions. The summer conditions likely a factor in the news-absent moves, especially ahead of risk events 1) FOMC minutes, and 2) 20yr auction, both of which have increased focus amid 1) the lack of Fed Chair Warsh’s communication, 2) recent weakness in the long end and it being potentially the most expensive for the Treasury in 25 years. Ahead of this, STIRS are steady with the market assigning a c. 30% probability of Fed tightening in September.
No major GBP move to UK CPI, which, in short, continues the narrative that the BoE is comfortable at 3.75% with data continuing to not surprise vs. market and BoE’s July MPR forecasts. The headline rise reflects the Ofgem price cap introduced this month, a point which was partially offset by a decent moderation in food inflation. Services moderated as expected, while ING notes the BoE's core services measure of inflation has picked up a little to 3.8% Y/Y, which, while hotter, shouldn't be too much to encourage those on the fence for tightening. In conjunction with the soft LFS on Tuesday, both show sufficient evidence to keep the BoE on hold for the rest of the year, with risks tilted both ways.
JPY is the G10 outperformer, benefitting from a softer Buck as the pair looks to return towards 159.00 after nearing 160.00 in the previous few sessions. Macro catalysts were light, though strength seen in KRW could have given a helping hand also. USD/JPY marked a session low of 159.05, a little off this level at the time of writing.

FIXED INCOME

Global fixed benchmarks are mixed this morning, though yields ultimately remain near recent multi-year highs as concerns surrounding geopolitical/fiscal remain. Price action today has been fairly rangebound given the lack of pertinent newsflow. The geopolitical environment remains tense, with President Trump continuing to threaten Iran; recent Iranian sources have rejected the White House’s claim that there have been direct negotiations between Iran and the US.
USTs (+2 ticks) currently holds towards the upper end of a 108-16 to 108-23 range. The docket is lacking for the remainder of the day, aside from the FOMC Minutes. It will be eyed to gauge hawkish sentiment among the wider FOMC, with markets currently leaning towards a hold in September. However, given recent soft US data, the Minutes could be looked through.
Bunds (-10 ticks) are slightly lower this morning. EZ HICP Final metrics were unrevised, spurring little move. Thereafter, a poor German auction (high retention), also spurred little action in primary markets. The subdued outing is likely due to the ongoing summer lull, and as European banks taper their bond purchases as they approach their minimum reserve holdings.
Gilts (+6 ticks) are outperforming this morning, taking lead from the region’s inflation report. Headline inflation rose from the prior (in-line with expectations), but much of the acceleration was attributed to Ofgem’s utility price hike. Dovish factors stem from a decent moderation in food inflation and cooling Services inflation (though mainly due to low air fares reading). Overall, the report will do little to shift the BoE away from its holding policy; ING expects the Bank to keep rates on hold for the remainder of the year, before delivering cuts in Spring 2027.
Germany sells EUR 3.769bln vs exp. 6bln 3.00% 2036 Bund: b/c 1.15x (prev. 1.10x), average yield 3.26% (prev. 3.13%), retention 37.2% (prev. 25.05%).

COMMODITIES

WTI and Brent October futures are higher for a fourth trading day, with Brent rising towards USD 92/bbl (vs low and WTI near USD 85/bbl (USD 84.36/bbl), as the US-Iran conflict showed no sign of resolution. Furthermore, weekly API data yesterday reported a modest draw in crude stockpiles. Elsewhere in energy, Dutch TTF is modestly softer and around an intraday low after gradually fading from levels above EUR 64.50/MWh to lows just above EUR 63/MWh. In shipping, China’s seaborne crude imports averaged around 6.8mln bpd in Aug 1-15 , vs ~7.3mln bpd in the same period in July, according to Vortexa. Tanker arrivals point to a pickup in the second half of August, though smaller than initially expected, leaving Chinese seaborne buying below pre-war levels for now.
Precious metals are mixed and within tight ranges. Spot gold remains under its 100 DMA (USD 4,381/oz) in a narrow USD 4,325-4,363/oz range vs yesterday’s USD 4,329-4,436/oz range. Spot silver is conversely subdued in a USD 62.54-64.33/oz range after dipping under yesterday’s USD 66.56/oz low. Gold edged higher as easing US bond selling reduced pressure after Tuesday’s decline, though analysts note that uncertainty over US-Iran relations and higher energy-led inflation remain potential headwinds.
Copper eased this morning towards the lower end of a tight USD 13,887-13,990/t. Reports note that the backwardation between immediate and three-month delivery eased to USD 248/ton (vs as much as USD 545 on Monday). Bloomberg notes that LME copper inventories available to buyers rose by more than 20,000 tons on Tuesday, the largest single-day jump since April, easing a historic supply squeeze; Trafigura was behind a significant share of the deliveries.
US Private Weekly Inventory Data (bbls) Crude -0.3mln (prev. +9.1mln), Gasoline +1.1mln (prev. -1.5mln), Distillate -2.8mln (prev. -0.6mln), Cushing -1.4mln (prev. +0.4mln)
ADNOC is reportedly aiming to trim the amount of crude sold to Asian customers in August and September, Bloomberg reported citing sources.

TRADE/TARIFFS

US President Trump posted "I have paused the 50% tariffs against Canada that was scheduled to kick in tomorrow morning for a three day period, based on the fact that Canada and the U.S.A., subject to finalization of documents, have reached a DEAL!"
USTR Greer said the deal with Canada will include comprehensive market access for all American goods, economic security commitments and digital trade alignment.
Canadian PM Carney said the US has agreed to postpone implementation of its 50% tariffs on a range of Canadian goods under Section 338 of the US Tariff Act of 1930 until the end of August 21st.

NOTABLE EUROPEAN HEADLINES

UK PM Burnham said No. 10 North will take over responsibility for economic growth from the Treasury as part of a transfer of power, according to The Times.

NOTABLE EUROPEAN DATA RECAP

UK CPI (Jul YY) 2.9% vs. Exp. 2.9% (Prev. 2.6%); CPI services 3.4% (Prev. 3.6%).
UK CPI (Jul MM) 0.3% vs. Exp. 0.3% (Prev. 0.1%).
UK Core CPI (Jul YY) 2.6% vs. Exp. 2.5% (Prev. 2.6%).
UK Core CPI (Jul MM) 0.2% vs. Exp. 0.1% (Prev. 0.3%).
UK Retail Price Index (Jul YY) 3.2% vs. Exp. 3.3% (Prev. 3.0%).
UK Retail Price Index (Jul MM) 0.6% vs. Exp. 0.8% (Prev. 0.3%).
European HICP Final (Jul YY) 2.9% vs. Exp. 2.9% (Prev. 2.8%).
European HICP Final (Jul MM) 0.2% vs. Exp. 0.2% (Prev. -0.1%).
European Core HICP Final (Jul YY) 2.5% vs. Exp. 2.5% (Prev. 2.4%).

CENTRAL BANKS

RBA Deputy Governor Hauser said inflation is too high, adding that monetary policy needs to bring inflation down and needs to reduce demand in the economy. Hauser added that they are not seeing recession, but just a slowdown. Worried about inflation and upside risk to inflation and that if inflation doesn't come down, will have to raise rates again.
ECB's Rehn said the wage growth and outlook remain moderate, there are no clear signs of second‑round effects and that keeping inflation expectations anchored is essential.
Indonesia Central Bank leaves rates unchanged at 5.75%, as expected.

GEOPOLITICS

MIDDLE EAST

US President Trump told top administration envoys to halt their conversations with Iran, according to CNN citing a US official.
US President Trump is waiting for Iran to cave to his economic pressure, but Tehran may be willing to wait even longer, according to Politico.
A source close to Iran's negotiating team said there had been no direct Iran-US negotiations and that talks with Oman concerned sovereignty over the Strait of Hormuz, according to Fars News.
Iranian Deputy Chairman of the Parliament's National Security Commission said "A 'new passage' in the Strait of Hormuz, other than the southern route, will soon be announced in the form of a joint statement with Oman."
Iran's Foreign Minister said the framework of Tehran's foreign policy will be based on a strong Iran, an Iran that is self-confident and in control of the situation.
Iran Foreign Ministry spokesman Baghaei dismissed UAE claims that Iran launched missiles, citing false flag operations in warning against 'baseless' accusations.
Iran has weighed attacking US military targets in Europe if US President Trump escalates the war, according to people close to the regime cited by FT.
Yemeni Houthis have placed Saudi Aramco and all its facilities, oil tanks, crude transfer pipelines and export ports on their list of targets, Al-Akhbar sources said. The source added that the process of monitoring and tracking Saudi oil tankers in the Red Sea is ongoing.
UAE Foreign Ministry said all trade, commercial exchanges and financial transactions with Iran have been halted until further notice.
UKMTO has received a report of an incident 40NM southeast of Al Mukha, Yemen. The cargo vessel was unmanned at the time of the incident, however the damage has resulted in a complete constructive loss.
The Israeli PM Office said Israel and Syria have agreed to maintain the status quo on security matters, which Syria was about to violate by allowing Turkish forces to deploy at an air base near Aleppo.
Syria's petroleum company said an explosion occurred at the gas export pipeline at the Al-Jabsah gas plant, leading to a halt of pumping through the pipeline

OTHER

US President Trump is pushing for a meeting with North Korean leader Kim Jong Un as soon as this fall, according to WSJ citing US officials.
US-South Korea joint military drills schedule is expected to be cut in half, according to South Korean media. It was later stated by a US Pentagon official that the US military substantially reduces exercise with South Korea and exercises will conclude one week early.
North Korea denounced US-South Korea military drills and said exercise of its right to self-defence will continue to completely neutralise enemies' military threat.

CRYPTO

Bitcoin remains well within Tuesday's range of USD 63.99k-65.02k range and comfortably above the nearest support of the 20- and 50-SMAs.

APAC TRADE

APAC stocks were mostly lower following the tech-led declines stateside, as yields remained elevated and oil continued to edge higher amid the ongoing geopolitical stalemate.
ASX 200 retreated amid a deluge of earnings and with RBA Deputy Governor Hauser sticking to the hawkish script, while Australian wage data matched estimates and spurred little reaction.
Nikkei 225 failed to benefit from stronger-than-expected Machinery Orders data and was pressured by the tech weakness, despite yields pulling back from multi-decade highs.
KOSPI underperformed amid pressure in the tech heavyweights, while sentiment was also not helped by strained US-South Korea ties after US President Trump reduced the joint drills with South Korea and is said to be pushing for a meeting with North Korean leader Kim as soon as this fall.
Hang Seng and Shanghai Comp were ultimately mixed, with the Hong Kong benchmark kept afloat as participants digested earnings releases including from Baidu and Xiaomi, while the mainland conformed to the broad downbeat mood with notable losses seen in the ChiNext Nasdaq-style board.

NOTABLE ASIA-PAC HEADLINES

Japanese Ministry of Defence is reportedly to request JPY 8.9tln spend in budget request, Nikkei reported.

NOTABLE APAC DATA RECAP

Japanese Machinery Orders (Jun MM) 9.7% vs. Exp. 7.8% (Prev. -12.4%).
Japanese Machinery Orders (Jun YY) 16.9% vs. Exp. 10.8% (Prev. -1.9%).