Weekend News Roundup - Newsquawk Asia-Pac Market Open

• US stocks and bonds rallied on Friday after Fed Chair Powell gave the nod to a September rate cut during his speech at Jackson Hole in which he stated that the shifting balance of risks may warrant adjusting the policy stance and warned that both goals are in tension with the downside risks to the labour market rising. Furthermore, he suggested that effects on consumer prices are now clearly visible and expects the effects will accumulate in the coming months, but also noted it is a reasonable base case that the inflation effect of tariffs will be short-lived. In the wake of the speech, a clear dovish reaction was observed, with markets pricing in 55bps of easing by year-end vs 48bps prior to the speech, while a September cut is still not fully priced in, but the probability had increased to 84% from 72%.
• US President Trump announced on Friday a major tariff investigation on US furniture imports, with completion expected within 50 days and the tariff rate is yet to be determined.
• Looking ahead, highlights include New Zealand, Japanese Leading Index, Singapore CPI, Holiday Closures on Monday in Philippines and UK.

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LOOKING AHEAD

• Highlights include New Zealand, Japanese Leading Index, Singapore CPI, Holiday Closures on Monday in Philippines and UK.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks and bonds rallied on Friday after Fed Chair Powell gave the nod to a September rate cut during his speech at Jackson Hole in which he stated that the shifting balance of risks may warrant adjusting the policy stance and warned that both goals are in tension with the downside risks to the labour market rising. Furthermore, he suggested that effects on consumer prices are now clearly visible and expects the effects will accumulate in the coming months, but also noted it is a reasonable base case that the inflation effect of tariffs will be short-lived. In the wake of the speech, a clear dovish reaction was observed, with markets pricing in 55bps of easing by year-end vs 48bps prior to the speech, while a September cut is still not fully priced in, but the probability had increased to 84% from 72%.
• SPX +1.52% at 6,467, NDX +1.54% at 23,498, DJI +1.89% at 45,632, RUT +3.86% at 2,362.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump announced on Friday a major tariff investigation on US furniture imports, with completion expected within 50 days and the tariff rate is yet to be determined.
• US food industry groups are pushing for exemptions from US tariffs and arguing that products from fish to cucumbers cannot be affordably grown at home, according to FT.
• European Commission President Von der Leyen defended the agreement on tariffs between the EU and the US, while she said it was a 'conscious decision' that avoided a trade war and called it a "good, if not perfect agreement", according to euro news.
• Canadian PM Carney confirmed on Friday that Canada will remove its counter tariffs on all US goods covered by the USMCA trade deal which will take effect on September 1st, 2025. Carney said Canada currently has the best trade deal with the US and it is important they do everything they can to preserve Canada's advantage, while he added that Canada will retain tariffs on steel, aluminium and autos as they work with the US to resolve issues there. Furthermore, it was reported over the weekend that Canada’s Trade Minister said Canada is optimistic about making a deal with US President Trump, according to Bloomberg.
• India’s Foreign Minister said trade negotiations are still going on and they have lines to maintain and defend, while he added the lines India cannot cross are the interests of farmers and small producers. Furthermore, he said India buying Russian oil was never brought up before the public announcement of tariffs and issues about buying Russian oil are not being used to target other major users such as China and the EU.
• French President Macron said he had an in-depth discussion on major international crises with South African President Ramaphosa, while they also reviewed economic and trade issues, as well as bilateral cooperation between France and South Africa.

NOTABLE HEADLINES

• Fed’s Musalem (2025 voter) said it is reasonable to expect the tariff inflation effect to fade, while he said more data is needed and he will be revising the rate path view all the way up to the September meeting. Musalem said Fed policy is modestly restrictive and the policy rate may warrant adjustment if risks to the job market intensify. Furthermore, he said inflation is above target with risk of persistence and the rate path could include a pause, as well as noted that the next jobs report may or may not be enough to justify a rate cut, depending on what it shows, and he is looking at the whole rate path, not just the rate decision at one meeting.
• US President Trump commented regarding Fed Chair Powell on Friday that it is still too late and they should have cut rates a year ago.
• US Pentagon plans a military deployment in Chicago as President Trump eyes a crackdown, according to The Washington Post.
• Fitch affirmed the US on Friday at AA+; Outlook Stable.
• US Commerce Secretary Lutnick confirmed on Friday that the US now owns 10% of Intel (INTC).

COMMODITIES

• Iraq raised its refining capacity to 1.3mln bpd from 1.1mln bpd in 2024, according to the PM’s office.
• Libya’s NOC said it will host the first Libyan-US energy forum soon.
• US President Trump’s team reportedly withheld Venezuelan oil approval for non-US majors, according to Bloomberg.
• Codelco said Chile’s mining regulator authorised the restart of operations at Andes Norte and Diamante divisions of the El Teniente mine.

GEOPOLITICAL

MIDDLE EAST

• Israel’s military conducted an attack on the Yemeni capital of Sanaa against targets which included a military compound where the presidential palace is located, two power stations and a fuel storage site.
• Iran’s Supreme Leader said the current situation with the United States was "unsolvable" and that they will stand strongly against the US demand to make Tehran ‘obedient’, according to Reuters citing state media.

RUSSIA-UKRAINE

• Ukraine’s PM discussed security guarantees with US special representative Kellogg.
• US Pentagon quietly blocked Ukraine’s long-range missile strike on Russia with the US Defense Department withholding approval as the White House sought to entice Moscow to open peace talks, according to WSJ. However, it was later reported that Ukrainian President Zelensky said Ukraine has lately been using its own weapons to hit Russia and does not consult on this with Washington.
• Russian President Putin said on Friday that there is light at the end of the tunnel in Russia-US relations and that contacts continue after the Alaska summit, while he hopes that the first steps are the start to a full-scale restoration of relations, which still depends on the West.
• Russia and Ukraine conducted an exchange of POWs in which they swapped 146 POWs each.
• Russia’s Defence Ministry said Russian forces captured Filiia in Ukraine’s Dnipropetrovsk region, according to Interfax.
• Russian air defence forces shot down a Ukrainian drone near the Kursk nuclear power plant and a fire broke out at the plant, although there were no safety threats to people or the plant. However, the Kusk acting Governor separately commented that the Ukrainian drone attack on the nuclear power plant is a threat to nuclear safety.
• Russian air defences downed a drone flying towards Moscow. It was separately reported that Ukrainian drones attacked an industrial facility in Russia’s Samara region and that debris from a destroyed Ukrainian drone attack sparked a fire at Russia’s Novatek Ust-Luga terminal.
• Norway is providing air defences worth SEK 7bln to Ukraine, which will be delivered from Germany to Ukraine, with Norway and Germany funding two patriot systems including missiles.

OTHER

• North Korean leader Kim oversaw the firing of new air defence missiles, according to KCNA. In relevant news, South Korea confirmed it fired warning shots earlier last week at North Korean soldiers who briefly crossed the border between the two countries, according to the BBC.

ASIA-PAC

NOTABLE HEADLINES

• BoJ Governor Ueda said at Jackson Hole that barring a major negative demand shock, the labour market is expected to remain tight and put pressure on wages, while he added that competition for workers has increased and more people are switching jobs. Ueda said they will continue to monitor the labour market developments closely and incorporate that into monetary policy. Furthermore, he said wages are now rising and labour shortages have become one of the most pressing economic issues, as well as noted that the demographic shift that began in the 1980s is producing acute labour shortages and persistent upward pressure on wages.
• Japanese PM Ishiba said Japan agreed to strengthen security and economic ties with South Korea, while South Korean President Lee said they agreed on South Korea-Japan relations, which are important in a fast-changing global political landscape.

EU/UK

NOTABLE HEADLINES

• BoE Governor Bailey said at the Jackson Hole Symposium that the UK faces an "acute challenge" over its weak underlying economic growth and reduced labour force participation since the COVID-19 pandemic, while he said the BoE shifted its focus away from long-term trends in unemployment to looking at levels of labour force participation instead, according to Reuters.
• ECB’s Lagarde said at Jackson Hole that the labour market has weathered recent shocks and proved to be surprisingly resilient in the face of an inflation shock and aggressive interest rate hikes, while she also commented that central bank independence is critically important.
• ECB’s Kazaks said the central bank entered a new monetary-policy phase where officials can focus on monitoring the economy rather than actively intervening to change its course, while he noted there is currently no need to lower rates further as inflation is at the 2% target and recent data has not signalled a marked change in the outlook since the quarterly projections in June, according to Bloomberg.
• ECB’s Rehn said the central bank is in no hurry to cut interest rates further after inflation reached its 2% target and with the economy performing slightly better than thought, according to Bloomberg.
• German Chancellor Merz said tackling economic woes is tougher than expected and that the US’s 15% tariffs on German exports will be a burden on the German economy, according to Bloomberg.
• Fitch affirmed the UK on Friday at AA-; Outlook Stable but stated that greater global uncertainty and weaker external demand will dampen investment growth.
• Italy’s Deputy PM Tajani said he opposes Italy imposing windfall taxes on banks, while he commented that banks should pay taxes and contribute but should not be surprised or scolded, according to Bloomberg.
• Canadian PM Carney will travel to Poland, Germany and Latvia during August 25th-27th and will meet with German Chancellor Merz, while Carney will be focused on strengthening relationships with European allies and advancing cooperation in key areas.