US stocks finished lower on the eve of the FOMC as yields climbed after hot Canadian CPI data and oil hit a YTD peak - Newsquawk Asia-Pac Market Open

US stocks finished lower and bonds were also pressured on the eve of the FOMC as yields climbed following hot Canadian CPI data and after oil prices climbed to a fresh YTD high. However, stocks clawed back some of the losses later in the session as oil prices eased from their peaks.
USD was ultimately flat ahead of the FOMC decision although the DXY briefly dipped beneath the 105.00 level early on before recovering throughout the session alongside a pickup in yields.
Looking ahead, highlights include New Zealand Current Account Balance, Australian Leading Index, Japanese Trade Data, PBoC Loan Prime Rates, Supply from Australia.

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Highlights include New Zealand Current Account Balance, Australian Leading Index, Japanese Trade Data, PBoC Loan Prime Rates, Supply from Australia.

US TRADE

US stocks finished lower and bonds were also pressured on the eve of the FOMC as yields climbed following hot Canadian CPI data and after oil prices climbed to a fresh YTD high. However, stocks clawed back some of the losses later in the session as oil prices eased from their peaks.
SPX -0.22% at 4,444, NDX -0.22% at 15,191, DJIA -0.31% at 34,518, RUT -0.42% at 1,827.
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NOTABLE HEADLINES

US Treasury Secretary Yellen said she sees a healthy cooling in the US labour market without mass layoffs and that they can withstand risks from auto strikes, a government shutdown, and student loan repayment resumption. Furthermore, Yellen said gas prices have risen after Saudi oil cuts, which is not desirable and noted tight policy is bringing down inflation in many developing countries, while she added that China has short- and long-term issues and there could be some spillover from China to the US.
US House Speaker McCarthy said the procedural vote on the short-term funding measure was delayed to provide more time for negotiations, while Reuters also reported that House Republicans failed to move forward on the defence spending as shutdown looms.
White House said it is no longer sending top officials to Detroit for UAW strike talks this week, according to CNBC.
Amazon (AMZN) is to hire 250k employees for the holiday season (prev. 150k last year) and is investing USD 1.3bln this year towards pay raises.

DATA RECAP

US Treasuries were sold ahead of the FOMC and following hot Canadian CPI data, while prices failed to benefit from a strong 20yr auction with underperformance in the belly.

USD was ultimately flat ahead of the FOMC decision although the DXY briefly dipped beneath the 105.00 level early on before recovering throughout the session alongside a pickup in yields.
EUR marginally softened after failing to sustain a brief foray above 1.0700.
GBP initially reclaimed the 1.2400 status against the dollar before fading the majority of the gains.
JPY continued to weaken as US yields rose which lifted USD/JPY to just shy of the 148.00 handle.
BoC Deputy Governor Kozicki said recent volatility in headline inflation is not unusual but the underlying trend shown by core measures was inconsistent with bringing inflation down to the 2% target and they are prepared to hike if required. Furthermore, she said core measures have eased but recent data indicates inflationary pressures are still broad-based and inflation has come down but is still too high which means real rates need to remain high.
Canadian CPI Inflation MM (Aug) 0.4% vs. Exp. 0.3% (Prev. 0.6%)
Canadian CPI Inflation YY (Aug) 4.0% vs. Exp. 3.8% (Prev. 3.3%)

Crude traded in a choppy fashion and hit fresh YTD highs before reversing into the settlement.
US Energy Inventory Data (bbls): Crude -5.3mln (exp. -2.2mln), Gasoline +0.7mln (exp. +0.3mln), Distillate -0.3mln (exp. +0.2mln), Cushing -2.6mln.
Libya’s Energy Minister said flooding has no impact on port operations and noted they did not discuss OPEC output at the WPC, while he added that Libya wants its output closer to the quota and that it is currently beneath quota.

White House's Kirby said the US wants to reopen military-to-military communications with China, according to MSNBC.
NATO Secretary General Stoltenberg told Reuters that Ukraine needs air defences urgently and needs not only new defence systems but spare parts and maintenance of arms as well, while he added the Ukraine war has not reached a stalemate.
Azerbaijan Defence Ministry started "anti-terrorist" operations in Karabakh, while large fighting began near Stepanakert in Nagorno-Karabakh as Azerbaijan announced the start of operations, according to ELINT News.

NOTABLE HEADLINES

US President Biden reiterated the US wants to de-risk, not de-couple from China, while he added the US stands ready to work with China on issues and seeks to responsibly manage competition with China.
US Commerce Secretary said there is no evidence that Huawei can produce advanced smartphones at scale.
US lawmakers planned to meet with a semiconductor industry group to express concerns over US investment in China's chip industry, according to Reuters citing sources.
China's Commerce Ministry said China and Russia should deepen trade and investment cooperation and improve the level of cross-border connectivity.
Russian Security Council Secretary said they are looking forward to thorough bilateral discussions between Russian President Putin and Chinese President Xi in Beijing next month, according to Ifx.
Japanese ruling LDP senior official Seko said economic stimulus of a minimum of JPY 15tln is needed and JPY 20tln is desired, while the size of economic stimulus must be around 3% of GDP, according to Jiji.
Canada's decision to pause talks on a trade deal with India and postpone the trade mission were directly linked to concerns over the murder of the Sikh leader in Canada, according to Reuters citing sources.

NOTABLE HEADLINES

BoE's Woods said they are seeing a pick-up in impairments across the financial sector from a very low base and are interested in banks' exposure to the Chinese property sector.
UK PM Sunak is reportedly considering weakening key net zero policies including delaying a ban on the sales of new petrol and diesel cars and phasing out gas boilers, according to BBC citing sources.

DATA RECAP