Board of Trade May Be Framed as Lone Win From U.S./China Summit — Market Talk

0924 ET - Jefferies says it sees the Board of Trade as "the single possible deliverable," from the summit between President Trump and Chinese leader Xi. Agreed in May, the mechanism cuts tariffs toward most-favored-nation levels on $30 billion of goods in each direction, scoped to non-sensitive items, the analysts say in a note. They are optimistic that Board of Trade will be emphasized as a win by both sides because they say it's the only item that doesn't concede anything strategic. "Everything else runs into incentives neither leader will override before November. Taiwan, Japan, Iran and the Russia sanctions bill stay unresolved but set the risk backdrop." ([email protected])0918 ET - Copper prices retreat as a firmer U.S. dollar and expectations of further interest-rate hikes weigh on sentiment across the metals complex. Three-month copper futures on the LME are down 0.6% to $14,693 a metric ton. The dollar index--which measures the greenback against a basket of other currencies--rises 0.2% to 100.83, making dollar-denominated commodities more expensive for overseas buyers. According to the CME's FedWatch tool, traders currently price in a 55% probability that the Federal Reserve will hike interest rates next month. Higher rates typically strengthen the U.S. dollar and increase the cost of holding raw materials, hurting copper. ([email protected])0918 ET - Speculative bets on the Swedish krona rising against sterling look appealing, Societe Generale's Kit Juckes says in a note. Consensus growth expectations for Sweden are well ahead of the rest of Europe, he says. "Of course, the interest-rate outlook matters more than the growth outlook, and Swedish rates remain subdued because of weak inflation." However, this could soon change, he says. The market largely expects the Riksbank to leave rates unchanged Thursday but prices a strong probability of rate rises in November and the first quarter of 2027. Meanwhile, Wednesday's weaker-than-expected U.K. purchasing managers' survey and the Bank of England's cautious stance on tightening argue for a softer sterling, he says. Sterling trades flat at 13.1132 krona. ([email protected])0905 ET - Treasury yields rise as markets face geopolitical uncertainty and brace for interest rate increases amid a lull in economic indicators. China's Xi Jinping visits the U.S. Brent crude rises 1%, back to $100 a barrel, following President Trump's threat to escalate the war in Iran if Tehran fails to accept a deal. Hawkish Fedspeak supports bets on a sequence of hikes into 2027. The 10-year yield rises to 4.988% from yesterday's settlement of 4.966% and the two-year increases to 4.796% from 4.749%. ([email protected]; @ptrevisani)0901 ET - Bitcoin prices are lower after a recent surge bringing prices to $87,000, the highest they've been since January. The crypto token is trading down 0.8% to $85,506, according to data from LSEG. Even so, the mood among investors regarding bitcoin is positive, with traders seeing the timing of bitcoin's jump as a positive sign for demand--which appears to be coming largely from ETFs, says Naeem Aslam of Zaye Capital Markets in a note. "Bitcoin's ability to hold… despite a recent 25-basis-point rate increase and stalled crypto legislation shows that institutional demand is currently offsetting some macro and regulatory headwinds," says Aslam. Ethereum is down 1% to $2,723, XRP slips 0.1% to $1.57, and solana is off 0.8% to $116.98. ([email protected])0854 ET - Sterling falls to a 12-week low against the dollar as the Bank of England's cautious stance on raising interest rates diverges from the Federal Reserve tightening policy. Markets are betting on further U.S. rate rises after the Fed lifted rates by 25 basis points last week and pointed to at least one more hike this year, supporting the dollar. In contrast, the BOE left rates unchanged last week and avoided strong signals about the prospect of future rate increases. Meanwhile, the latest U.K. purchasing managers' survey came in weaker than expected. Sterling falls 0.6% to as low as $1.3260, LSEG data show. ([email protected])0804 ET - European banks are likely to keep up their strong performance over the next year, S&P Global Ratings analysts say at a media briefing event in London. Banks' profitability is expected to increase in 2027, as higher central-bank rates boost interest revenue, the analysts say. Additionally, operating costs are expected to remain modest as banks continue to adopt efficient technology, they say.([email protected])0800 ET - The dollar has scope to rise further, particularly against sterling, after the Federal Reserve raised interest rates and signalled further tightening last week, HSBC's Daragh Maher says in a note. "With Fed credibility on an upswing, we believe the FX market will increasingly look to other currency vulnerabilities beyond the U.S." HSBC expects further dollar gains against sterling, which looks exposed to U.K fiscal risks ahead of October's budget and the potential for the Bank of England to disappoint market bets for rate rises, he says. Another challenge is weak U.K. labor demand ahead of another possible real income squeeze if energy prices remain elevated, he says. Sterling falls to an eight-week low of $1.3271, according to LSEG.([email protected])0742 ET - The latest strong eurozone PMI surveys support the case for interest-rises from the European Central Bank in December and February, given the rebound in global energy prices and remarkable resilience in domestic demand, HSBC's Chris Hare says. Previously, HSBC penciled a hike in December only. The change is based on the likelihood that the energy situation might not improve much or could even intensify over the winter, he says in a note. However, the lack of second-round effects from the energy shock means the ECB can reverse upcoming rate hikes in 2028. "We expect cuts in March and June that year--taking the deposit rate to 2.5%, which we think is broadly neutral," Hare says. ([email protected])0740 ET - Norges Bank's rate decision on Thursday could go either way, as there are arguments to hold and to hike, DNB Carnegie senior economist Oddmund Berg writes. DNB Carnegie expects the central bank to stand pat at 4.25%, while noting that the risk of a hike remains substantial. "This remains a marginal decision, with the underlying factors pointing in different directions." On the one hand, the committee has become more concerned about persistent above-target inflation, while energy prices have risen and foreign rate expectations have moved higher. On the other hand, the committee has repeatedly stressed that it will not tighten policy more than necessary. With data since June pointing towards weaker demand, lower inflation and a stronger Norwegian krone, the cost of waiting is low, he says. ([email protected])0738 ET - The striking resilience of the eurozone's PMI data shows that once the energy-price shock fades, the region could be heading for above trend-growth in late 2027 and 2028, Berenberg's Andrew Wishart says in a note. "The risk to our long-held call for a mini-boom in 2028 is that it may start over the course of 2027 already," he says. The eurozone composite PMI climbed to 53.1 in September from 52.0 in August, a 41-month high. The encouraging pickup in new orders, as well as backlogs of work and employment in response to German fiscal stimulus, rising government military expenditure, and signs of more private sector investment in AI support a broadly positive outlook, he says. ([email protected])0737 ET - The Hungarian central bank's decision Tuesday to pause interest rate cuts and lower its inflation target is positive for the forint, ING's Frantisek Taborsky says in a note. However, the global backdrop remains largely negative despite the recent improvement in risk sentiment, he says. The dollar is stronger, the forint remains highly sensitive to energy prices and the prospect of further Federal Reserve interest rate hikes could trigger renewed pressure on emerging market currencies, he says. "The overall picture is thus very mixed, and global factors could easily take the driver's seat."ING still sees scope for the euro to fall below 360 forints but this depends on global factors, he says. The euro rises 1.1% to 364.08 forints. ([email protected])