EU mid-market update: Bond yields off recent highs as drop in crude overshadows rate expectations and hawkish commentary; Awaiting Nvidia numbers and Rubin color tonight.
Notes/observations
- Europe's own signal has turned hawkish but market unconvinced. Sources tipped ECB policymakers to raise rates in September to stem the war's inflationary side effects, with little appetite to guide beyond that move, and Schnabel put it plainly, rates must rise further, the extent contingent on the data. Traders read it as a one-and-done: Bunds firmed, the euro softened against the dollar, equities opened mixed, and oil and gas was the heaviest sector as crude extended its decline. Domestic data was second-tier but constructive, Swiss expectations improving clearly, Spanish mortgage lending accelerating sharply on the year across both totals and approvals, Swedish producer prices decelerating markedly. UK inflation expectations rose in August after recent falls, on energy and cost-of-living pressure, with a survey showing one in three employers cutting entry-level roles. Corporate tape is carrying the session rather than the macro: Stadler Rail, SoftwareONE and Gurit all sharply higher on H1 numbers with Gurit raising guidance, Hochschild firmer, Siemens Energy beginning the separation of its Transformation of Industry unit, and Ambu sharply lower after cutting its outlook on slower anaesthesia volumes.
- Washington has swapped strikes for sanctions, and the oil market has taken the hint. Rubio's message to foreign counterparts, that the US does not expect to initiate new strikes for the time being, and will run the campaign through economic pressure instead, landed alongside the most concrete Hormuz framework yet: Iran and Oman working toward a permanent route within sixty days, with Araghchi describing joint mine-clearing and shared future management of the strait, and Russian state media floating a ceasefire announcement in coming days. The physical picture has not caught up. Commodity transits ticked up off a single crossing but remain well below their ten-day average, and Saudi barrels are reaching China by ship-to-ship transfer off Oman rather than through the strait. Asia continues to build around the chokepoint rather than wait for it: Tokyo's cabinet office will fund pipelines on non-Hormuz routes and cover the extra shipping cost, Takaichi is weighing incentives for fuel diversification, Seoul is cutting industrial power tariffs. This is optimism about a framework, not a reopening, the war-risk and freight premia unwinding faster than the barrels are moving.
- Rest of the hawkish turn is imported, and it is priced off a shock that may already be unwinding. Australia's July CPI beat clearly on both headline and the trimmed mean, the core measure firming rather than fading, and Deutsche Bank moved straight to calling an RBA hike in September. Japan's services producer prices hit a multi-year high on oil-sensitive components, Kiuchi expects consumer prices to keep climbing on Middle East conditions, and the BOJ is sending its most hawkish dissenter to Jackson Hole in Ueda's place, a substitution to read as the message it is. Hjelm warned of a challenging period for Riksbank policy; Barkin made the fiscal version of the argument, warning of an eventual reckoning on US debt; a large minority now looks for a Fed hike next month. That is cover for the ECB, but it leaves European rates hostage to whether Hormuz reopens before September.
- Ahead: Nvidia tonight, the Jackson Hole guest list today and Warsh's first keynote from Thursday, Himino and the BoK Thursday, US PCE and Fitch on France Friday.
- Tail risks: Washington is weighing further trade measures against Canada, non-tariff ones included, into an already punitive regime.
- TTN NVDA results preview: tonight's report arrives with estimates already aggressive yet options price only a 5.4% move, so a routine beat now matters far less than proof that the next several hundred billion in revenue is becoming more durable. Rubin is already ramping, but the real test is whether Blackwell + Rubin sequential growth stays strong without a clean hand-off, because that would mean NVIDIA is shortening product cycles while expanding the installed base fast enough for generations to overlap rather than replace each other. The deeper puzzle is financial: memory (especially SOCAMM2) now dominates the Vera Rubin BOM, system prices are rising >15%, and NVIDIA is helping turn compute into an infrastructure asset class with residual-value support, all while trying to keep ~75% gross margins; success would show that CUDA creates a compute yield curve in which older GPUs cascade into lower-value but still collateralizable workloads instead of vanishing. If Rubin accelerates without destroying Blackwell utilization, older cards retain rental value, margins hold under heavier memory content, Vera lifts GPU utilization, and third-party capital finances ACIE growth, NVIDIA will have done something rarer than semiconductor dominance - it will have turned each new GPU generation into simultaneous product, collateral, revenue stream and funding mechanism for the next.
- AI insiders hint that OpenAI may have already pretrained a >10T-parameter model codenamed Bel—successor to Doug and the alleged base for Astra and, after further RL, GPT-6—that some insiders view as a possible AGI-threshold starting state rather than AGI itself; the claim rests on a single usually-reliable source and remains unconfirmed. The real shift might be architectural: instead of endlessly rewriting the same huge weights, recent work (Learning Fast and Slow / GEPA and Test-Time Context Distillation) separates durable slow knowledge from fast, temporary adaptations so a gigantic pretrain can serve as an expensive stock of generality that is only permanently altered when a discovery has proved broad enough to justify the cost. OpenAI’s own Sol (GPT-5.6) already shows early fragments of this loop—autonomously rewriting kernels to cut serving cost 20% and designing experiments that improved token efficiency >15%—yet remains strongest on dense, mechanical feedback and weakest where scientific taste is required, while continuous learning immediately creates a verification bottleneck that turns compute into the clock rate of the entire hypothesis–test–consolidate cycle. If Bel is genuinely treated internally as an AGI base, its significance is therefore not the parameter count but whether it can preserve plasticity, convert verified experience into intermediate memory, and accelerate the next cycle of discoveries—turning the decisive metric from “what the model knew at the end of pretraining” into “how much useful knowledge is still inside it a week later, and whether that knowledge made the following week’s discoveries arrive faster.”
- Asia closed mixed with KOSPI outperforming +1.0%. EU indices -0.1% to +0.3%. US futures -0.2% to +0.1%. Gold -0.7%, DXY +0.1%; Commodity: Brent -2.7%, WTI -3.0%; Crypto: BTC -0.4%, ETH -0.6%.
Asia
- South Korea Aug Business Manufacturing Survey: 103.8 v 103.2 prior; Non-Manufacturing Survey: 96.7 v 95.2 prior.
- Japan July PPI Services Y/Y: 3.6% v 3.2%e.
- Australia July Westpac Leading Index M/M: 0.03% v 0.05% prior.
- Australia July CPI M/M: 1.0% v 0.9%e; Y/Y: 3.5% v 3.3%e.
- Australia July CPI Trimmed Mean M/M: 0.5% v 0.3% prior; Y/Y: 3.6% v 3.5%e.
- Australia Q2 Construction Work Done: -2.1% v +0.5%e.
- South Korea July Retail Sales Y/Y: 6.5% v 9.5% prior.
Mid-East
- Trump administration said to be restoring staff to several Middle East diplomatic mission. Personnel would return to posts in Israel, Lebanon, Saudi Arabia, and Baghdad.
Europe
- ECB policymakers said to be prepared to raise rates in September to stem side effects of Iran War. policymakers had little appetite to signal further tightening.
Americas
- Fed’s Barkin (non-voter) there would eventually be a reckoning of US debt. July decision to hold rates was a "close call".
Energy
- Weekly API Crude Oil Inventories: +4.2M v -0.3M prior.
- Irani Foreign Minister Araghchi and Omani counterpart Albusaidi outlined an “interim framework” for a temporary maritime corridor and mine clearance.
Speakers/fixed income/FX/commodities/erratum
Equities
Indices [FTSE -0.03% at 10,883.32, DAX -0.03% at 26,277.14, CAC-40 +0.42% at 8,475.02, IBEX-35 +0.35% at 20,125.91, FTSE MIB +0.23% at 52,842.00, SMI +0.45% at 14,590.30, S&P 500 Futures -0.07%].
Market focal points/key themes: European equities held near one-week highs Wednesday as the Stoxx Europe 600 edged up 0.11%, with the DAX and CAC 40 largely sideways while the FTSE 100 lagged under energy-stock pressure; a 2.6% drop in Brent crude to $86.32 provided the main macro relief after regional mediators signaled the U.S. and Iran were nearing an interim ceasefire securing commercial transit through the Strait of Hormuz, later reinforced by official confirmation from Iran and Oman that talks on fully reopening the waterway had resumed. That support was tempered by ECB board member Isabel Schnabel’s warning that current policy rates remain insufficient to return inflation to target over the medium term given persistent Middle East risks and euro-area resilience, reinforcing expectations of another 25-basis-point hike in September, while trading desks stayed defensive overall ahead of Nvidia’s pivotal after-hours earnings—the critical test for global AI hardware demand underpinning European suppliers such as ASML, STMicroelectronics and Infineon—and positioning for U.S. PCE data plus the Jackson Hole symposium. Among individual movers, SoftwareOne jumped 10% on strong H1 like-for-like revenue growth and sharply higher margins, Salzgitter rose 5%, Heidelberg Materials and Deutz each gained 3%, Fraport advanced 2.5% on lower oil, Deutsche Bank climbed 2% and E.ON added 1% after a Berenberg upgrade, while Kudelski sank 7.5% despite some operational improvement as EBITDA stayed negative, SAP fell 3.5% after UBS cut it to Neutral citing slow agentic-AI monetisation, SMA Solar and Dermapharm each dropped 3%, and energy names including BP, Equinor, Shell and TotalEnergies declined 1–2.5% in lockstep with crude.
Equities
- Energy: BP [BP.UK] –2.0%, Equinor [EQNR.NO] –2.5%, Harbour Energy [HBR.UK] –2.5%, Galp [GALP.PT] –2.0%, Neste [NESTE.FI] –2.0%, Eni [ENI.IT] –1.5%, OMV [OMV.AT] –1.5%, Shell [SHEL.UK] –1.5%, TotalEnergies [TTE.FR] –1.0%, Repsol [REP.ES] –1.0% (shared oil-price catalyst: Brent falling again as Iran/Oman negotiations reduce the perceived Hormuz/supply-risk premium; BP –2.08%, Equinor –2.39%, Harbour –2.28%, Galp –1.99%, Neste –1.85%, Eni –1.36%, OMV –1.29%, Shell –1.26%, TotalEnergies –0.93%, Repsol –0.99% on the same 09:02–09:03 CEST cross-European feed; this is a genuine sector read-through, not ten separate stories).
- Financials: Deutsche Bank [DBK.DE] +2.0% (€33.89; markedly outperforming the flat/slightly lower DAX, but no comparably important fresh company-specific morning catalyst identified; current volume already ~1.46m shares on the quoted feed).
- Technology: SoftwareOne [SWON.CH] +10.0% (CHF9.51 at 09:02; H1 like-for-like constant-currency revenue +11.6%; adjusted EBITDA margin 24.9%, +4.5pp y/y; Q2 margin accelerated to 28.9%; CHF100m run-rate synergies reached the top of the target and another CHF5–10m was identified; FY revenue/margin guidance retained — the market is rewarding the combination of double-digit organic growth and substantially faster margin capture), Kudelski [KUD.CH] –7.5% (CHF1.23 at the Swiss open; [L●━━━━━H] early-session print; despite Core Digital Security returning to revenue growth for the first time in five years and MDR bookings +69%, total group revenue/other operating income still slipped to $171.8m from $174.5m and EBITDA remained negative $11.5m; the reaction suggests the market wanted a materially faster earnings inflection than the operational “improvement” headline delivered), SAP [SAP.DE] –3.5% (€179.29, –3.33% on the latest cash feed; UBS cut Buy → Neutral after a ~48% four-week rally; analyst Michael Briest says agentic-AI integration remains slow, monetisation is constrained and a deceleration in current cloud backlog growth in H2 is now the most likely scenario).
- Materials: Salzgitter [SZG.DE] +5.0% (cash move strengthened to ~+4.8% after the open; €55.85 on the latest mover screen; no new Salzgitter corporate release or meaningful morning broker action identified after the company/peer scan, so I would treat this as a steel/materials tape move rather than attach a false company-specific catalyst), Heidelberg Materials [HEI.DE] +3.0% (€167.08; holding among the strongest DAX/MDAX-adjacent cyclicals; no material fresh company announcement identified this morning, so the move looks primarily like construction/materials strength rather than a new fundamental datapoint).
Speakers
- ECB's Schnabel (hawk, Germany) noted that rates must rise further on inflation risks; Extent of tightening to depend on incoming data. ECB must prevent second round effects early on.
- Sweden Central Bank (Riksbank) Hjelm noted of challenging period head for policy.
- Thailand Central Bank Policy Statement noted that the vote to keep policy steady was unanimous. Deemed that the current policy rate was 'appropriate' for the economy. Growth was low but supported by AI and technology. Inflation was lower than forecast but noted headline CPI to rise through Q1 of 2027 due to El Nino effects. To continue monitoring economic outlook and risks.
- Japan PM Takaichi noted that was considering incentives for companies to diversify fuel sources.
Currencies
- USD was locked in tight ranges ahead of some key US data release later in the session that included the 2nd reading of Q2 GDP data and PCE readings. Focus also remained on the recent pullback in oil prices amid reports about progress on reopening Strait of Hormuz.
- Approaching Sept, one must remember that the time historically marks a ramp up in market volatility. Market participants anticipate that many global central bank could pull the trigger on rate hikes (BOJ, ECB, RBA, possible the Fed all have ‘live’ meetings.
- EUR/USD steady around 1.1670 aided ny reports that ECB was leaning towards a Sept rate hike.
- USD/JPY remains locked around the 159 area with JGB yields following the US bond action. Markets still anticipating another BOJ rate hike before the end of the year.
- The 10-year German Bund yield last at 3.20%, France 10-year Oat at 4.05% and 10-year Gilt yield at 4.98%; 10-year Treasury yield: 4.65%; 10-year JGB: 2.87%.
Economic data
- (SE) Sweden July PPI M/M: 0.1% v 0.1% prior; Y/Y: 6.2% v 7.4% prior.
- (TH) Thailand Central Bank (BoT) left Benchmark Interest Rate unchanged at 1.00%.
- (ES) Spain Jun Total Mortgage Lending Y/Y: 27.4% v 13.5% prior; House Mortgage Approvals Y/Y: +10.8% v -0.1% prior.
- (CH) Swiss Aug UBS Expectations Survey: 12.1 v 10.0 prior.
Fixed income issuance
- (IT) Italy Debt Agency (Tesoro) sold €3.0B vs. €2.5-3.0B indicated range in new 3.00% Oct 2028 BTP bonds; Avg Yield: 3.02% v 2.89% prior, bid-to-cover: 1.58x v 1.79x prior.
- (SE) Sweden sold total SEK5.0B vs. SEK5.0B indicated in 2028 and 2045 Bonds.
Looking ahead
- (CO) Colombia July Industrial Confidence: No est v -0.1 prior; Retail Confidence: No est v 28.6 prior.
- 05:30 (DE) Germany to sell combined €2.0B in 2041 and 2048 Bonds.
- 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays.
- 06:00 (UK) Aug CBI Retailing Reported Sales: -35e v -26 prior; Distribution Reported Sales: No est v +1 prior.
- 07:00 (US) MBA Mortgage Applications w/e Aug 21st: No est v -0.4% prior.
- 07:00 (BR) Brazil Aug FGV Construction Costs M/M: 0.7%e v 0.6% prior.
- 08:00 (BR) Brazil mid-Aug IBGE Inflation IPCA-15 M/M: -0.3%e v +0.1% prior; Y/Y: 4.3%e v 4.5% prior.
- 08:00 (UK) Daily Baltic Dry Bulk Index.
- 08:30 (US) Q2 Preliminary GDP Annualized (2nd of 3 readings) Q/Q: 1.5%e v 1.5% advance; Personal Consumption: 3.2%e v 3.2% advance.
- 08:30 (US) Q2 Preliminary GDP Price Index (2nd of 3 readings): 6.2%e v 6.2% advance; Core PCE Price Index Q/Q: 3.4%e v 3.4% advance.
- 08:30 (US) July Personal Income: 0.2%e v 0.2% prior; Personal Spending: 0.1%e v 0.3% prior; Real Personal Spending (PCE): 0.0%e v 0.4% prior.
- 08:30 (US) July PCE Price Index M/M: +0.1%e v -0.1% prior; Y/Y: 3.6%e v 3.7% prior.
- 08:30 (US) July Core PCE Price Index M/M: 0.2%e v 0.1% prior; Y/Y: 3.3%e v 3.3% prior.
- 08:30 (US) July Preliminary Durable Goods Orders: 0.5%e v 0.5% prior; Durables (ex-transportation): 0.6%e v 0.7% prior; Capital Goods Orders (non-defense/ex-aircraft): 0.7%e v 1.2% prior; Capital Goods Shipments (non-defense/ex-aircraft): 1.0%e v 2.0% prior.
- 10:30 (US) Weekly DOE Oil Inventories.
- 11:30 (US) Treasury to sell 17-Week Bills.
- 11:30 (US) Treasury to sell 2-Year FRN Reopening.
- 12:00 (RU) Russia July Industrial Production Y/Y: -0.3%e v +0.6% prior.
- 12:00 (CA) Canada to sell 10 Year Bonds.
- 13:00 (US) Treasury to sell 5-Year notes.
- 13:30 (BR) Brazil July Total Federal Debt (BRL): No est v 9.268T prior.
- 14:30 (MX) Mexico Central Bank (Banxico) Inflation Report (QIR).
- 18:00 (HU) Hungary Aug Business Confidence: No est v -5.3 prior; Consumer Confidence: No est v 1.6 prior; Economic Sentiment: No est v -3.5 prior.
- (KR) Bank of Korea (BOK) Interest Rate Decision: Expected to raise Repo Rate by 25bps to 3.00%.
- 21:30 (AU) Australia Q2 Private Capital Expenditure (Capex): 0.8%e v 6.5% prior.
- 21:30 (AU) Australia July Household Spending M/M: 0.3%e v 0.8% prior; Y/Y: 5.7%e v 6.0% prior.
- 21:30 (CN) China July Industrial Profits Y/Y: No est v 15.1% prior; YTD Y/Y: No est v 18.7% prior.
- 22:00 (NZ) New Zealand to sell combined NZ$450M in 2031, 2034 and 2041 bonds.
- 23:00 (TH) Thailand July Customs Trade Balance: -$5.3Be v -$6.5B prior; Exports Y/Y: 17.8%e v 20.8% prior; Imports Y/Y: 42.0%e v 50.3% prior.
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