NY Open – Nervous energy
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Markets trade cautiously as we head into Sep FOMC, with 40bps of cuts now priced in. Asian holidays (CNY, KRW) meant for a quiet session to begin, we are seeing slight front-end UST underperformance as we print, with 2s trading at 3.57%. USD remained soft, helping EURUSD remain at recent highs despite a poor ZEW survey, where investor optimism plunged (3.6 vs 17 cons.). Equity markets are in the green, Eurostoxx 50 seeing a sharp rally (1% at print). US retail sales at 08:30 EDT could still be pivotal – our economists are expecting a fall in total retail sales (-0.2%). Aug IP follows (09:15) – we expect a rebound but still see weak underlying trends. CAD CPI at 08:30 should continue to moderate, watch trim and median core measures but headline should print flat MoM. Limited catalysts in EM – IDR trade balance came stronger than expected.
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