EU Mid-Market Update: New Nvidia’s China chip; Trilateral meeting with Putin and Zelenskiy on the cards as soon as in next two weeks; Security guarantee talks win over the favor of EU and Ukraine; Jackson Hole looms.

Notes/observations

– Geopolitical focus from Trump’s White House meeting with high level European leaders, including Zelenskiy. Hopes for peace or ceasefire have increased, given West’s conviction for trilateral meeting between both Putin and Zelenskiy. Security guarantee seems to be the concession by US to warm Zelenskiy over. Oil is trading lower on the reduced tensions while dollar is steady. Gold remains stuck in tight range. Equities flat ahead of incoming catalysts like Target/Walmart earnings and Fed Chair Powell speech on Fri.

– S&P affirmed US sovereign rating at AA+, outlook remains stable. It noted it “could lower the rating over the next two to three years if already high deficits increase, reflecting political inability to contain rising spending or to manage revenue implications from changes in the tax code”.

– Nvidia is reportedly developing a China-specific Blackwell-based B30A accelerator that uses a single-die design with roughly half the raw compute of the dual-die B300 yet above H20 performance, featuring HBM and NVLink, with sample shipments targeted as early as September, alongside a separate Blackwell inference chip for China. U.S. approval remains uncertain; In June, Wolfe Research has flagged a potential new China chip as soon as the October quarter that could restore 50-60% of China revenue and Trump has hinted he may allow 30-50% scaled-down chips.

– US Treasury yields are little changed ahead of Jackson Hole. Remaining on bonds, Metzler says potential for eurozone bond yield spread tightening vs Bunds is largely exhausted as ECB rate cut cycle nears end; Higher defense spending and ECB balance sheet reduction could pressure spreads wider. While Danske Bank says rising deficits in US and Europe will drive significant increase in government bond supply.

– US investment-grade spreads narrowed to 75 bps vs Treasuries, lowest in 25 years.

– Bitcoin pullback viewed as ‘market correction’.

– Traders expecting Home Depot results with comments on recent spending and pricing trends; Walmart on Thursday.

– Asia closed lower with KOSPI underperforming -0.8%. EU indices +0.2-0.8%. US futures flat. Gold +0.2%, DXY +0.2%; Commodity: Brent -1.1%, WTI -1.2%; Crypto: BTC +0.3%, ETH -0.5%.

Asia

– Australia Aug Westpac Consumer Confidence: 98.5 v 93.1 prior (3.5-year high).

– New Zealand Q2 PPI Output: 0.6% v 2.1% prior: Input Q/Q: 0.6% v 2.9% prior.

– Japan LDP Politician Kono Taro: Reiterates Japan must reverse weak Yen; “I think it’s better to start early”, referring to how soon the BOJ should resume interest rate hikes.

– Japan Defense Ministry said to have requested a record ¥8.8T budget.

Global Conflict/tensions

– Ukraine Pres Zelensky: Security guarantees were central in talks; we seek a lasting peace, not just a temp pause; received key US signal on security guarantee; offered trilateral meeting, ready for any format with Putin; security guarantee to be finalised within 10 days;

– US Sec of State Rubio: US to build security guarantee for Ukraine with European/non-European allies; each side needs to make concessions to end the war.

– NATO’Sec Gen Rutte: A very successful day, further details on security guarantee will be discussed in coming days; Zelensky confirms Ukraine is ready for bilateral talks.

– Putin/Trump held a 40 min phone call, described as constructive; discussed possibility of raising level of Russia/Ukraine negotiators; Trump described the call as an early positive step.

– Russia press confirmed Trump and Putin spoke after Monday’s White House meeting with Zelenskiy and European leaders. The hope is to hold Putin/Zelensky meeting by end of Aug.

– Path to any accord still appears uneasy. Trump insisting that the two wartime leaders must first meet one-on-one before any trilateral gathering.

– German Chancellor Merz noted that Putin had agreed to a summit with the Ukrainian leader following a phone call with Donald Trump on Monday.

– Ukraine will promise to buy $100bn of American weapons financed by Europe in a bid to obtain US guarantees for its security after a peace settlement with Russia. Territory remains the sticking point,

Americas

– S&P affirmed United States sovereign rating at AA+; Outlook remains Stable.

– US govt said to consider converting Intel’s CHIPS Act grant funds into 10% stake.

Trade

– China said to have purchased the first cargo of canola from Australia since 2020.

Speakers/fixed income/FX/commodities/erratumEquities

Indices [Stoxx600 +0.46% at 556.58, FTSE +0.21% at 9,177.05, DAX +0.32% at 24,380.20, CAC-40 +0.74% at 7,942.50, IBEX-35 +0.42% at 15,302.50, FTSE MIB +0.65% at 42,918.00, SMI +0.67% at 12,137.40, S&P 500 Futures -0.07%].

Market Focal Points/Key Themes: European indices open generally higher and advanced through the early part of the session; optimism around a ceasefire in Ukraine seen supporting risk appetite; among sectors leading the way higher are materials and technology; lagging sectors include health care and energy; earnings expected in the upcoming US session include Home Depot, Metronic and Toll Brothers.

Equities

– Consumer discretionary: International Workplace Group [IWG.UK] -16.5% (earnings; buyback).

– Financials: Jyske Bank [JYSK.DK] +3.0% (earnings) – Healthcare: Basilea Pharma [BSLN.CH] -5.5% (earnings), DocMorris [DOCM.CH] -11.0% (earnings).

– Technology: ASML [ASML.NL] +1.0% (Nvidia said to be working on new chip for China) – Materials: BHP Group [BHP.UK] +2.0% (earnings; market outlook), Nanoco Group [NANO.UK] +1.5% (trading update; Founder to retire).

Speakers

– UK Treasury Min Torsten declined to comment on reports of UK property tax plan. Would not seek pension age of 70 in the near term.

– China said to lift curbs on export of rare earth magnets to India.

Currencies/fixed income

– USD drifter lower during another quiet EU session. Focus on the Wed release of the FOMC Minutes and Friday’s speech by Fed Chair Powell at Jackson Hole.

– EUR/USD edging back towards 1.17 neighborhood.

– GBP/USD at 1.3520.

– USD/JPY at 147.70.

– 10-year German Bund yield at 2.77% and 10-year Gilt yield at 4.75%. 10-year Treasury yield: 4.34%.

Economic data

– (EU) Euro Zone Jun ECB Current Account: €35.8B v €31.8B prior.

– (GR) Greece Jun Current Account Balance: +€1.2B v €0.2B prior.

– (PT) Portugal Jun Current Account Balance: +€0.5B v -€0.4B prior.

– (IT) Italy Jun Current Account Balance: €5.7B v €1.7B prior.

– (HK) Hong Kong July Unemployment Rate: 3.7% v 3.5%e.

Fixed income issuance

– (UK) DMO sold £1.6B in 1.125% Sept 2035 inflation-linked Gilts (UKTi); Real Yield: 1.728% v 1.588% prior; bid-to-cover: 3.10x v 3.35x prior.

Looking ahead

– (IL) Israel July Leading ‘S’ Indicator M/M: No est v -0.7% prior.

– (IL) Israel Aug CPI Forecast: No est v 2.3% prior.

– 05:25 (EU) Daily ECB Liquidity Stats.

– 05:25 (CH) Switzerland to sell 3-month Bills;

– 05:30 (DE) Germany to sell €4.5B in 2.2% Oct 2030 BOBL.

– 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

– 05:30 (ZA) South Africa to sell combined ZAR3.75B in 2040, 2044 and 2048 bonds.

– 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).
Bonds

– 06:00 (PT) Portugal July PPI M/M: No est v 0.9% prior; Y/Y: No est v -3.0% prior.

– 06:00 (TR) Turkey to sell bonds (2 tranches).

– 06:30 (EU) ESM to sell €1.1B in 6-month bills; Avg Yield: % v 1.923% prior; Bid-to-cover: x v 2.4x prior (July 15th 2025).

– 08:00 (UK) Daily Baltic Dry Bulk Index..

– 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

– 08:30 (US) July Housing Starts: 1.300Me v 1.321M prior; M/M: -2.0%e v 4.6% prior.

– 08:30 (US) July Preliminary Building Permits: 1.387Me v 1.393M prior; M/M: -0.2%e v -0.1% prior.

– 08:30 (CA) Canada July CPI M/M: 0.3%e v 0.1% prior; Y/Y: 1.8%e v 1.9% prior; Core-Median Y/Y: 3.1%e v 3.1% prior; Core-Trim Y/Y: 3.1%e v 3.0% prior; Consumer Price Index: 164.9e v 164.4 prior.

– 08:55 (US) Weekly Redbook LFL Sales data.

– 11:00 (CO) Colombia Jun Trade Balance: -$1.1Be v -$1.4B prior; Total Imports: $5.3Be v $6.1B prior.

– 11:30 (US) Treasury to sell 6-Week Bills.

– 14:10 (US) Fed’s Bowman.

– 16:30 (US) Weekly API Crude Oil Inventories:

– 19:50 (JP) Japan July Trade Balance: ¥200Be v ¥152.1B prior (revised from ¥153.1B); Adjusted Trade Balance: -¥81.4Be v -¥235.5B prior; Exports Y/Y: -2.1%e v -0.5% prior; Imports Y/Y: -10.0%e v 0.3% prior (revised from 0.2%).

– 19:50 (JP) Japan Jun Core Machine Orders M/M: -0.6%e v -0.6% prior; Y/Y: 4.7%e v 4.4% prior.

– 21:00 (CN) China PBOC Monthly Loan Prime Rate (LPR) Setting: Expected to leave both 1-year and 5-year LPR unchanged at 3.00% and 3.50% respectively).

– 21:10 (KR) Bank of Korea to sell KRW1.3T in 3-Year Bonds.

– 22:00 (NZ) New Zealand Central Bank (RBNZ) Interest Rate Decision: Expected to cut Official Cash rate (OCR) by 25bps to 3.00%.

– 22:00 (AU) RBA’s McPhee, Jones hold panel Discussion.

– 23:00 (NZ) RBNZ Gov Hawkesby post rate decision press conference.

– 23:00 (KR) South Korea Q2 Short-Term External Debt ($): No est v $149.3B prior.