MNI US OPEN - Kashkari Holds Hawkish Ahead of Jackson Hole

NEWS

FED (MNI): Hawkish Kashkari - No Tradeoff Amid Inflation Fight
The Federal Reserve must keep raising interest rates in an economy dominated by high inflation and it will be a long time before policymakers must debate any tradeoff with its full employment goal, Minneapolis President Neel Kashkari said Tuesday, in comments that showed just how hawkish an official that was considered a key dove on the FOMC has become.

FED (MNI): Jackson Hole: What We Know So Far

• The main publicly-known events on the Jackson Hole schedule so far are Chair Powell's speech "Economic Outlook" at 1000ET Friday the 26th, and ECB's Schnabel appearing on a panel on Saturday the 27th.
• The theme of the symposium, which begins at a private dinner Thursday evening and features speeches/panels Friday and Saturday, is "Reassessing Constraints on the Economy and Policy".
• The full schedule will be released Thursday at 2000ET (0100UK time early Friday morning), which will include the various academic paper presentations.

US (BBG): US Retail Diesel Prices Rise for the First Time in Two Months
US diesel prices at the pump rose overnight, snapping the longest losing streak in two years as farmers stocked up on the fuel used to harvest crops, competing with truckers for a shrinking pool of supplies. The country’s average retail diesel price rose to $4.977 a gallon for the first time since peaking at $5.816 a gallon in mid-June, according to auto club AAA. The increase ends 62 consecutive days of declines. Prices at the pump have risen along with diesel futures contracts, which have gained more than 20% in a little over two weeks.

RUSSIA/US/INDIA (BBG): India Wary of Russia Oil Cap as US Official Arrives to Push Plan
India will seek broader consensus before it supports US-led efforts to cap the price of Russian oil, which American officials are expected to push for this week when they travel to Mumbai and New Delhi. The South Asian nation, which has emerged as one of the biggest buyers of Russian oil since the invasion of Ukraine, is hesitant to join the plan unless a consensus is reached with all buyers, according to people familiar with the matter, asking not to be identified because the deliberations aren’t public.

SOUTH KOREA (MNI): MNI BoK Preview - Back To A 25bps Hike Pace

• A 25bps hike is our base case and 16 out of 17 surveyed economists by Bloomberg expect such a move, with one forecasting a 50bps hike.
• Since the last policy meeting in mid-July, inflation data continue to show firm upside pressure, although the pace of upside surprises has eased somewhat. There is little doubt the BoK will also raise its 2022 inflation forecast.

FOREX: Greenback Consolidates After Tuesday Dip

• The dollar sits in minor positive territory ahead of NY hours, recovering modestly the data-inspired dip yesterday. The USD Index is well off Tuesday's 108.077 low print, but holds below cycle highs of 109.27 seen in Asia-Pac trade earlier this week.
• The JPY is recovering alongside the greenback, putting EUR/JPY at new weekly lows and within range of 134.95, the key pullback support from earlier this month. Equity futures are distinctly mixed and don't point to any material improvement in sentiment at the Wall Street opening bell later today, with European cash indices little changed on the day.
• Nonetheless, the CHF rate extends recent strength, with EUR/CHF nearing 0.9553, the cycle low and the lowest level printed since 2015. Downtrendline support drawn off the mid-May lows for the cross could then provide some support at 0.9513.
• Economic data and news across the European morning have been few and far between, with markets on watch for any further details ahead of this weekend's Jackson Hole policy symposium, with the full schedule touted for release ahead of the formalities late Thursday
• Prelim durable goods data crosses from the US, with pending home sales also on the docket.

BOND SUMMARY: Bonds and Rates markets recover from the lows

• A mixed start for EGBs, Bund and Rate markets.
• Early price action saw Bonds and rate futures fall deeper into the red, with Bund testing the July peak in Yield, printed a 1.382% vs 1.378% high in July.
• Govies and rates have consolidated some of the early price action with no clear driver for the Bounce.
• Likely some short term, short covering play from Fast Money.
• Most notable moves are in the spread this morning.
• BTP/Bund spread sits wider in early trade, and widest since the 27th July.
• Resistance are at the July high 236.14, and the June high at 240.47bps.
• The June high was also the widest print since 07/05/20.
• BTP/Bund is now at 232.2bps.
• Continued widening in the Gilt/Bund spread, albeit by just 0.9bp in early trade.
• The spread has been widening since the 21st July, a one way no let off rally, now widest since 9th March.
• Gilt volume will also likely be dominated by rolling into December, with first notice on the 30th, without forgetting that Monday is a Bank Holiday in the UK.
• US Treasuries Futures outperform Europe and the Bund, with US futures underpinned following yesterday's US Data misses. Continued tightening in the Tnotes/Bund spread, tightest since 21st July, at 170.1bps.
• Most of the action in the US will now be on rolling position into December, and the pace are expected to pick up from today.
• Looking ahead, only notable data, will be the US prelim Durable Goods.

EQUITIES: Defensives Outperforming Early

• Asian markets closed lower: Japan's NIKKEI closed down 139.28 pts or -0.49% at 28313.47 and the TOPIX ended 4.26 pts lower or -0.22% at 1967.18. China's SHANGHAI closed down 61.02 pts or -1.86% at 3215.203 and the HANG SENG ended 234.51 pts lower or -1.2% at 19268.74.
• European equities are trading mixed/flat, with financials and materials stocks weighing most heavily, and defensives (consumer staples, utilities) outperforming: the German Dax down 17.11 pts or -0.13% at 13179.97, FTSE 100 down 27.9 pts or -0.37% at 7460.75, CAC 40 down 0.46 pts or -0.01% at 6362.2 and Euro Stoxx 50 up 1.75 pts or +0.05% at 3656.
• U.S. futures are flat: Dow Jones mini down 3 pts or -0.01% at 32898, S&P 500 mini up 1.5 pts or +0.04% at 4132, NASDAQ mini up 7.25 pts or +0.06% at 12903.75.

COMMODITIES: Oil Extends Rally While Copper Drops

• WTI Crude up $1.19 or +1.27% at $94.99
• Natural Gas up $0.11 or +1.22% at $9.305
• Gold spot up $4.57 or +0.26% at $1752.85
• Copper down $1.45 or -0.39% at $367.7
• Silver up $0.06 or +0.3% at $19.1753
• Platinum up $2.8 or +0.32% at $887.75