US stocks gained as a jump in jobless claims further boosted rate cut bets - Newsquawk Asia-Pac Market Open

• US stocks gained despite an initial choppy reaction in equity futures to US data releases in which CPI printed broadly in line (ex. headline M/M, which was hot), while initial jobless claims soared to 263k (exp. 235, prev. 236k) and continued to add to the economic concerns around the labour market. As such, Fed money market pricing moved more dovish, with 73bps of easing priced in by year-end vs. 68bps pre-data and all main indices gained, despite the initial two-way price action.
• USD was pressured as participants reacted to soft labour data in which the initial jobless claims were higher than expected and subsequently boosted Fed rate cut bets with around 73bps of cuts priced in by year-end (prev. 68bps), while CPI figures largely matched estimates.
• Looking ahead, highlights include New Zealand PMI, Comments from RBA Assistant Governor Jones, Supply from Japan.

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LOOKING AHEAD

• Highlights include New Zealand PMI, Comments from RBA Assistant Governor Jones, Supply from Japan.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks gained despite an initial choppy reaction in equity futures to US data releases in which CPI printed broadly in line (ex. headline M/M, which was hot), while initial jobless claims soared to 263k (exp. 235, prev. 236k) and continued to add to the economic concerns around the labour market. As such, Fed money market pricing moved more dovish, with 73bps of easing priced in by year-end vs. 68bps pre-data and all main indices gained, despite the initial two-way price action.
• SPX +0.85% at 6,587, NDX +0.60% at 23,993, DJI +1.36% at 46,108, RUT +1.83% at 2,422.
• Click here for a detailed summary.

TARIFFS/TRADE

• China's MOFCOM held a meeting with foreign trade firms and will make efforts to resolve difficulties facing trade firms, while it will implement policies and measures to stabilise foreign trade.
• US Commerce Secretary Lutnick said there is an intention to resolve trade issues with India and will resolve issues with Switzerland over time, while he added that Europeans will block Chinese cars, according to CNBC.
• Mexican President Sheinbaum said she does not seek conflict with Asian nations over tariffs and is speaking to ambassadors from countries in which they have announced tariffs, while she is focused on strengthening national industries.

NOTABLE HEADLINES

• US Treasury Secretary Bessent met this week with Warsh, Lindsey, and Bullard as the search for the next Fed chair continues, while Bessent is waiting for the end of the Fed blackout to speak with sitting Fed officials and the goal is to add one or two names to candidates Trump has already mentioned, a group that includes 11 economists.
• US Senate is to vote on Stephen Miran's nomination to be Fed Governor on Monday, according to CNBC.
• US President Trump's administration asked the US appeals court to pause a ruling that blocked the removal of Fed Governor Lisa Cook.

DATA RECAP

• US CPI YY (Aug) 2.9% vs. Exp. 2.9% (Prev. 2.7%)
• US Core CPI YY (Aug) 3.1% vs. Exp. 3.1% (Prev. 3.1%)
• US Cleveland Fed CPI (Aug) 0.3% (Prev. 0.3%)
• US Initial Jobless Claims w/e 263.0k vs. Exp. 235.0k (Prev. 237.0k, Rev. 236k)
• US Continued Jobless Claims w/e 1.939M vs. Exp. 1.951M (Prev. 1.94M, Rev. 1.939M)

FX

• USD was pressured as participants reacted to soft labour data in which the initial jobless claims were higher than expected and subsequently boosted Fed rate cut bets with around 73bps of cuts priced in by year-end (prev. 68bps), while CPI figures largely matched estimates.
• EUR was firmer amid the weaker buck and following the ECB rate decision to keep rates unchanged, as expected, while Lagarde said risks to growth have become more balanced (prev. risks to economic growth remain tilted to the downside), as well as commented that the disinflationary process is over and they are still in a good place.
• GBP strengthened with GBP/USD rebounding from support around the 1.3500 level owing to the weaker dollar, while attention turns to incoming data from the UK including monthly GDP, as well as industrial and manufacturing production.
• JPY was mixed but ultimately strengthened against the dollar with some whipsawing seen following US data.
• CBRT cut its Weekly Repo Rate by 250bps to 40.5% (vs exp. 200bps cut).

FIXED INCOME

• T-notes were lifted following a spike in Initial Jobless Claims data but then spent most of the session fading its gains.

COMMODITIES

• Oil prices were lower and snapped a 3-day win streak gains amid a lack of energy newsflow.
• OPEC MOMR stated that 2025 and 2026 global oil demand forecasts were unchanged from last month’s assessment.
• IEA OMR raised the 2025 world oil demand growth forecast to 740k BPD (prev. 680k BPD), while the 2026 growth forecast was maintained at 700k BPD.

GEOPOLITICAL

MIDDLE EAST

• Sirens sounded in southern Israel after the infiltration of a hostile aircraft, according to the IDF.
• US President Trump reportedly demanded a commitment from Israeli PM Netanyahu not to strike Qatar again after the attack against Hamas leaders in Doha earlier in the week, according to Axios sources.
• Qatar denied an Axios report on re-evaluation of security partnership with the US, and called the claims "categorically false".
• Doha is to host an emergency Arab-Islamic summit on Sunday and Monday amid discussions over Israeli attacks on Gaza, according to the Qatar News Agency.

RUSSIA-UKRAINE

• US President Trump's Envoy to Ukraine, Kellogg, visits Kyiv, according to Reuters citing a source familiar with the matter.
• Foreign ministers of Poland, Ukraine and Lithuania warned of deliberate Russian drone incursion and called it an unprecedented provocation, while ministers urged partners to bolster Ukraine's air defence and extend support to Lithuania and Poland amid escalating tensions.
• Polish military representatives are to visit Ukraine to train on shooting down drones, according to sources via Reuters.
• German spokesman said they plan to intensify support for Ukraine.

ASIA-PAC

NOTABLE HEADLINES

• Alibaba (BABA) and Baidu (BIDU) reportedly adopt their own AI chips in a major shift for Chinese tech, partly replacing AI chips made by Nvidia (NVDA), according to The Information.

EU/UK

NOTABLE HEADLINES

• ECB kept its rates unchanged, as expected, with the Marginal Lending Rate at 2.40%, Refinancing Rate at 2.15%, and Deposit Rate at 2.0%. ECB stated that the inflation outlook is broadly unchanged, with the inflation picture similar to June and it will remain data-dependent and make policy on a meeting-by-meeting basis. ECB reiterated that rate decisions will be based on its assessment of the inflation outlook and risks surrounding it, in light of incoming economic and financial data, as well as dynamics of underlying inflation and strength of monetary policy transmission, while it is not pre-committing to a particular rate path. Furthermore, ECB staff projections showed that 2026 and 2027 HICP inflation and GDP growth projections were softer than expected.
• ECB President Lagarde said risks to growth have become more balanced (prev. risks to economic growth remain tilted to the downside) and revealed that the decision on rates was unanimous. Lagarde said the disinflationary process is over and that they are still in a good place, as well as not that inflation is where policymakers want it to be and minimal deviations from the target will not necessarily justify movement. Furthermore, she said Eurozone bond markets are operating in an orderly manner, and functioning with smooth liquidity, while QT is proceeding smoothly.
• ECB rate cut debate is said to not be over but October is seen as too soon and the next real discussion is more likely in December, according to Reuters sources.
• ECB policymakers are convinced that no further interest-rate cuts are needed to deliver 2% inflation, despite new economic projections pointing to an undershoot over the next two years, according to Bloomberg sources who added that unless the EZ experiences another major shock, borrowing costs are set to stay where they are for some time. Furthermore, it was noted that while a reduction at October’s meeting can be virtually ruled out, December will be an opportunity to reassess as fresh quarterly forecasts will include 2028, and the reluctance for additional monetary loosening matches the views of investors, who are leaning against any more cuts.