US equity futures are flat into today's CPI print, which is expects to show a modest increase in YoY prints (full preview here) with bond yields reversing an earlier drop. As of 8:00am ET, S&P and Nasdaq futures were down 0.1%, with Mag7 names mixed in premarket trading: NVDA is lower as China asks firms to not use the H20 chips; Intel gains after its CEO met Trump last night with Trump posting positive comments after the meeting. European stocks erase early gains of as much as 0.4%. The dollar gains for the second day while US Treasuries trade flat, with the yield on 10-year notes at 4.29%. Commodities are higher led by Metals; gold is flat at $3350 as is bitcoin which trades just under $119K. Trump announced he would nominate labor stats critic EJ Antoni for head of BLS. US economic data slate focuses on the CPI print at 8:30am; we also get the July federal budget balance at 2pm.
In premarket trading, Mag 7 stocks are mixed (Tesla +0.3%, Microsoft +0.1%, Amazon -0.05%, Meta +0.02%, Alphabet -0.1%, Nvidia -0.1%, Apple -0.5%). Nvidia dipped after China urged local firms to avoid the chipmaker’s H20 processors, particularly for government-related purposes. The move will complicate Nvidia’s attempts to recoup billions in lost China revenue, as well as the Trump administration’s push to turn those sales into a US government windfall. Here are some other notable premarket movers:
Today's inflation report (full preview here) arrives after traders in recent weeks ramped up bets for Federal Reserve rate cuts this year, anticipating that officials will act to bolster a labor market showing signs of softening. Absent a shockingly hot number, the Fed is expected to cut rates next month. Still, investors will remain cautious to the risk of persistent price pressures and the potential for a stagflationary backdrop. Traders have priced in more than two rate cuts by December, with about an 80% probability of a quarter-point reduction next month. The core consumer price index, regarded as a measure of underlying inflation because it strips out volatile food and energy costs, is expected to show a 0.3% increase for July, compared to 0.2% in the previous month.
“Positive equity market sentiment over the past few months has been predicated in part on the Fed cutting rates,” said Daniel Murray, chief executive officer of EFG Asset Management. “If the CPI release causes the date of the first rate cut to be pushed out, there is clearly a risk that sentiment takes a hit.”
While price action could be skewed to the downside in the event of a hot print, there is also upside risk that investors might be overlooking, according to Goldman Sachs Group Inc. traders.
"What worries us is a rotation that could happen in the ‘market bullish’ scenario of a benign CPI,” said Shawn Tuteja, who oversees ETF and custom baskets volatility trading at the bank. “One way to hedge against that is buying cyclical calls, but another way in our view given levels and overall asymmetry, could be to strike some semis and AI hedges.”
Elsewhere, some investors and analysts also warned that Trump’s 90-day extension of the US-China trade truce could prolong uncertainty and pose a more persistent risk to inflation, clouding the outlook for Fed policymakers. “While it preserves the flow of goods under prior terms with 30% rate, it keeps the threat of them very much in place,” said Ahmad Assiri, a research strategist at Pepperstone. “For the Fed, this reinforces the difficulty of striking the right balance between supporting growth and containing inflation.”
European stocks rose before the key US inflation data. The Stoxx 600 rises 0.2%, led by energy, industrial and mining shares. US equity futures are little changed.
Earlier in the session, Asian equities advanced as global trade worries eased after Trump’s China tariff move. The MSCI Asia Pacific Index rose as much as 0.8%, led by Japanese shares which hit a record high after trading resumed following Monday’s holiday. Japanese and Korean chip stocks were given a boost by Trump’s signal he would be open to allowing Nvidia to sell a scaled-back version of its Blackwell AI chip to China.
In rates, treasuries are little changed ahead of July CPI data at 8:30am New York time, with UK and German yields higher after data including a smaller-than-expected drop in UK payrolls. US yields remain within 1bp of Monday’s closing levels with 10-year near 4.29%; UK and German 10-year counterparts are higher by 4bp and 1.4bp after a smaller-than-expected drop in payrolls prompted traders to trim bets on interest-rate cuts by the Bank of England this year.
In FX, the pound gains 0.3%, topping the G-10 leader board with the Swiss franc. The Aussie dollar underperforms after the RBA cut rates and trimmed its 2025 growth outlook.
UK 10-year yields rise 3 bps to 4.59%. The pound gains 0.3%, topping the G-10 leader board with the Swiss franc. The Aussie dollar underperforms after the RBA cut rates and trimmed its 2025 growth outlook. The Stoxx 600 rises 0.2%, led by energy, industrial and mining shares. US equity futures are little changed. Nvidia slips 0.3% premarket after
In commodities, WTI crude is steady near $64, and spot gold climbs $7 to $3,349/oz.
Looking at today's calendar, US economic data slate includes the CPI print at 830a, and July federal budget balance at 2pm. Fed speaker slate includes Barkin (10am) and Schmid (10:30am). Lastly, notable earnings include CoreWeave and Circle Internet Group.
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APAC stocks shrugged off the weak lead from Wall St and traded mostly higher with outperformance in Japan on return from the extended weekend and following a deluge of earnings, while participants also reflected on the recent US-China trade truce extension. ASX 200 eked slight gains and extended on record highs with only mild tailwinds seen after the RBA delivered a widely expected 25bps rate cut. Nikkei 225 surged on return from the long weekend and followed suit to the record-setting performance in the TOPIX with the index underpinned following a slew of earnings releases and recent currency weakness. Hang Seng and Shanghai Comp kept afloat following the confirmation of a 90-day extension to the US-China tariff truce with the new deadline set for November 9th.
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European bourses (STOXX 600 +0.3%) began the session firmer, and continue to hold this bias but in rangebound trade into US CPI. European sectors traded mostly in the green (bar Tech) for the entire morning, given the slightly upbeat tone ahead of CPI. Energy trades at the top of the pile with Basic resources nipping at its heels for most of the morning - the latter lifted by strength in underlying iron ore prices.
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DB's Jim Reid concludes the overnight wrap
Markets have been relatively subdued over the last 24 hours, as investors await today’s US CPI print and the much anticipated Trump-Putin summit on Friday. One obstacle for the week has passed as Trump last night extended the US-China trade truce for another 90 days. The previous deadline was due to expire today. So with investors very much in wait-and-see mode, major asset classes only saw modest moves yesterday, with the S&P 500 (-0.25%) closing slightly lower, whilst 10yr Treasury yields (+0.3bps) moved very little all day. Asian markets have picked up a bit of positive momentum overnight though.
Of course, the relative calm could all change today with the US CPI print for July, where investors are keenly focused on how tariffs are filtering into consumer prices. Indeed, our US economists think that the core CPI print will be at +0.32%, which would be the fastest in six months, and clearly raise concerns about inflation that’s still lingering above the Fed’s target. So if realised, that would push the year-on-year core CPI rate up to +3.0%, and it would be very close to rounding up to +3.1%. Then for headline inflation, they’re looking for a +0.24% monthly print, that would push the year-on-year number up to +2.8%. For more details, see our economists’ full preview and how to sign up to their webinar here.
This report will be an important one for the Fed, in part because of the unexpectedly weak jobs report earlier this month. That contained sizeable downward revisions and meant that markets have dialled up their expectations for rate cuts as soon as the next meeting in September, with futures currently giving that an 88% chance. So our economists note in their preview that a downside surprise in today’s CPI print would strengthen rate cut expectations, whereas an in-line or stronger print would require further data to provide clarity on that. They also put out a note yesterday on the implications of Stephen Miran’s appointment to the Fed’s Board, and run through what it would take to get a 25bp or 50bp cut at the next meeting (link here). Their central case remains that there will be no cuts until December but obviously the risks are building that it is earlier.
Sticking to the Fed, Bloomberg reported yesterday that two vice chairs, Michelle Bowman and Philip Jefferson, as well as Dallas Fed President Lorie Logan, were under consideration for the Fed Chair position next year. Compared to other recent stories on the topic, the report suggested that a wider range of candidates were in play and that Treasury Secretary Scott Bessent will interview additional candidates in the coming weeks before presenting a recommended short-list to Trump.
Overnight Mr Trump has appointed EJ Antoni to lead the Bureau of Labor Statistics after firing the former head on the day of the last payroll report (August 1st). Antoni was the chief economist at the Heritage Foundation, a conservative policy think tank that authored the Project 2025 report that informed much of Trump 2.0 administration's thinking.
The other important news surrounded Ukraine yesterday, and it was confirmed that German Chancellor Merz will convene Trump and President Zelensky and other European leaders for an emergency call tomorrow afternoon before Trump’s talks with Putin. According to Politico, the call will discuss different options against Russia, questions about Ukrainian territories seized by Moscow, security guarantees for Kyiv and the sequencing of potential peace talks. However, investor expectations for a breakthrough out of Friday’s meeting between Trump and Putin faded yesterday, with Trump himself downplaying expectations from what he called a “feel-out” meeting. Several European bourses lost ground, including the STOXX 600 (-0.06%), the DAX (-0.34%) and the CAC 40 (-0.57%). Oil prices fluctuated ahead of the talks, with Brent crude eventually closing up +0.18%.
US equities also saw pretty muted moves on Monday, even after news broke over the weekend that Nvidia (-0.35%) and AMD (-0.28%) had agreed to pay 15% of their revenues on Chinese AI chip sales to the US government in a deal to secure export licenses, even if some say the move is illegal. Trump confirmed the deal, saying he could also allow Nvidia to export a scaled-back version of its most advanced Blackwell chip to China. The Philadelphia Semiconductor Index fell -0.13%, with its decline mitigated by Intel (+3.51%) whose CEO Lip-Bu Tan met with Trump yesterday, despite Trump calling for his resignation last week. The Mag-7 (-0.09%) saw a modest outperformance thanks to a +2.85% advance by Tesla.
One other notable story was Trump’s extension last night of the tariff truce between the US and China, which was due to expire today, for another 90 days. As a reminder, after an escalatory spiral post-Liberation Day that saw US tariffs on China go as high as 145%, additional US tariffs on China have been at 30% since the truce agreed in mid-May. China has also extended their own suspension of tariffs for 90 days, with November 10th being the new deadline for both sides.
Meanwhile in fixed income, US Treasuries were little changed ahead of the CPI release today, with the 2yr yield up +0.5bps and the 10yr up +0.3bps to 4.29%. Our rates strategists yesterday recommended going short 10yr Treasuries with a 4.60% yield target, seeing upside for term premia trades. With the US seeing a negative supply shock on tariffs and immigration but with demand growth indicators still close to potential, they see the economic case for policy rates going deeply below neutral as relatively weak, while aggressive rate cuts due to political pressure could lead long-end yields to rise. See their full note here for more.
Continental European yields edged higher in several countries yesterday, including 10yr bunds (+0.8bps), OATs (+0.7bps) and BTPs (+0.9bps). However, 10yr gilts (-3.6bps) outperformed, as investors priced in more rate cuts from the Bank of England over the coming months in response to a weak KPMG-REC corporate payroll survey.
Overnight in Asia, markets are mostly continuing their recent run, buoyed by the 90-day tariff pause between the US and China. The CSI (+0.60%) and Shanghai Composite (+0.51%), are higher but with the Hang Seng and KOSPI broadly flat. The Nikkei (+2.76%) is very strong after yesterday's holiday. In Australia, the RBA decreased its cash rate target by 25bps to 3.60% as universally expected, with the S&P/ASX200 increasing after the decision (+0.33%). Equity futures are trading a touch higher this morning, with the S&P 500 up +0.09% and the Nasdaq up +0.10%.
To the day ahead now, in addition to the US July CPI report we’ll also get data on NFIB small business optimism, federal budget balance, UK June average weekly earnings, unemployment rate, July jobless claims change, Germany’s August Zew survey and June’s current account balance, the Eurozone’s August Zew survey, and Canada’s June building permits. Central bank speakers include Fed’s Barkin. Lastly, notable earnings include CoreWeave and Circle Internet Group.