MARKET WRAPS
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Trading update from JD Sports
Opening Call:
European stock futures fell early Thursday. Asian stock benchmarks advanced; the dollar and Treasury yields fell slightly; oil was little changed; gold gained.
Equities:
Stock futures pointed to a lower open in Europe early Thursday. U.S. stocks rose overnight after the Treasury Department said it would buy back more longer-dated bonds, easing pressure on a market that had pushed borrowing costs to their highest levels in nearly two decades.
"It is a bit of notice of intent that the Treasury is seeing what's going on in longer-end yields and is taking a couple of steps to respond there," said Taylor Nugent, senior economist at National Australia Bank. "What the Treasury has done is kind of bought a bit of reprieve from the [rising yield] trend, and we've certainly seen that in a fallback in longer-end yields," Nugent added.
"While buybacks alone are unlikely to alter longer-term fundamentals, they do signal willingness by policymakers to lean against further yield increases," said Lloyd Chan, a senior currency analyst at MUFG Bank.
Forex:
The U.S. Treasury's slew of measures including its announcement to buy back more longer-term debt points to a softer dollar, said State Street Investment Management's Masahiko Loo.
"While these steps may improve market functioning, they do little to change the bigger picture of inflation and fiscal concerns, rising term premiums, and AI-driven capital demand," he said. "In the grand scheme of things, that points to a softer dollar and continued support for gold, as investors revisit de-dollarization and currency debasement concerns," Loo added.
Bonds:
The U.S. buyback of longer-dated debt is relatively small, said Coolabah Capital's Kieran Davies. While the purchase of bonds and open-ended comments by policymakers can have a sustained effect on yields, the purchases usually have to be extremely large to have a significant effect, he said.
Energy:
Oil rose slightly in Asia amid lingering tensions in the Middle East. The U.A.E. "said that it was cutting all economic ties with Iran after it accused it of firing ballistic missiles at its territory," ANZ said.
"While U.A.E.'s energy infrastructure was not targeted, it closes another potential avenue for diplomatic efforts to end the conflict and reopen the Strait of Hormuz," ANZ said.
Metals:
Gold gained in Asia amid a weaker dollar and falling Treasury yields. Its "break above the psychologically important 200-day MA could further strengthen sentiment towards the metal and encourage additional investor inflows," said DBS's Sherilyn Chew. Sucden Financial reckons the overall base metal complex remains vulnerable to the risk of higher oil prices and U.S. yields weighing on risk appetite.
"Copper and zinc spreads still signal tightness, but the collapse in copper backwardation shows that prompt pressure is easing, so outright prices now need stronger macro support to stabilize," Sucden said. Iron ore prices are under pressure as supply is likely to remain ample in 2H, Nanhua Futures said. That said, the commodity may face "an inflection point" for end-user demand recovery, it noted.
TODAY'S TOP HEADLINES
Bessent Leans Into His Role as America's Bond Trader in Chief
Treasury Secretary Scott Bessent has shown he'll do unconventional things to get markets moving his way. His latest maneuver is his most radical yet.
Facing an uncomfortable rise in longer-term interest rates, Bessent took action early Wednesday when the agency he leads announced that it would significantly step up purchases of government bonds as part of its existing buyback program. Markets quickly responded in a way they haven't to Bessent's previous moves, with stocks rising and Treasury yields falling sharply.
Fed Minutes Reveal Broader Support for Rate Increases
More Federal Reserve officials favored raising interest rates last month than the three who formally dissented, and others signaled they would back an increase if inflation doesn't improve, according to minutes of the meeting released Wednesday.
"Many participants assessed that policy tightening would likely be necessary if inflation did not decline," the minutes said.
Trump Threatens Iran With 'Economic D-Day'
WASHINGTON-President Trump vowed to unleash what he called "ECONOMIC D-DAY" on Iran as frustrations mount over lack of progress on reopening the Strait of Hormuz or reaching a deal to end the nearly six-month war.
Trump said on Wednesday evening he would launch a major economic campaign against Iran and any entity that does business with the regime. The president said it would be "the MOST CRUSHING ECONOMIC OPERATION EVER TAKEN AGAINST ANY COUNTRY!" Trump didn't say what specifically the U.S. will do in addition to the heavy sanctions that are already on Tehran.
Trump's Plan to Squeeze Iran's Economy Will Live or Die in Dubai
President Trump's effort to squeeze Iran into submission will depend heavily on curbing one of the country's biggest economic lifelines: Dubai.
The United Arab Emirates said late Tuesday that it has suspended financial and economic transactions with Iran, potentially threatening Tehran's access to a major source of imports and a financial back door to the world.
OpenAI's Latest Bid to Fight Anthropic: A Promise Not to Keep Customer Data
OpenAI promised not to retain data from businesses using its artificial-intelligence models while increasing the safety of its products, a bid to snatch customers from rival Anthropic who are upset the maker of Claude is keeping their information.
The maker of ChatGPT said Wednesday that it was previewing new technology to some customers that let it detect patterns and safety risks across multiple interactions with its models. The goal is to move beyond previous AI safety systems that monitored interactions individually, which made it difficult to ensure tools were being used properly without retaining some customer data.
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Expected Major Events for Thursday 04:30/NED: Jul Unemployment
06:00/GER: Jul PPI
06:00/DEN: 2Q Preliminary GDP
06:00/SWI: Jul Trade Balance
06:00/NOR: 2Q Labour Cost Index - preliminary figures
06:45/FRA: 2Q New home sales
07:30/SWE: Swedish repo rate announcement
08:00/POL: Jul Average gross wages
08:00/POL: Jul PPI
08:00/POL: Jul Industrial Production Index
08:30/UK: May Card Spending statistics
09:00/LUX: Jul Unemployment
09:00/EU: Jun Construction output
10:00/UK: Jul Aluminium Production report
10:00/UK: Aug CBI Industrial Trends Survey
10:00/IRL: 2Q Labour Force Survey
15:59/GRE: Jun Balance of Payments
17:59/POR: Jun ICSG Copper Report
23:01/UK: Aug UK Consumer Confidence Survey
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