Newsquawk US Market Wrap - NVDA earnings leads tech higher as US/Iran tensions ramp up

• SNAPSHOT: Equities up, Treasuries down, Crude up, Dollar flat, Gold up.
• REAR VIEW: NVDA earnings beat & strong guidance; Trump admin told mediators it has no interest in going back to the terms of the MoU it reached with Iran in June; Initial and continuing claims fall W/W beneath exp.; White House on Iran said no negotiations happening right now and all options remain on the table; Iran said will not allow US, French, and UK vessels to enter the region of Hormuz; Fed's Hammack said now is the time to act, argues for higher rates; WH reportedly mulls a new round of tariffs on chips; CRM and CRWD earnings beat expectations.
• COMING UP: Data: Japanese Tokyo CPI (Aug), Unemployment Rate (Jul), French/Spanish Prelim CPI (Aug), German Unemployment Rate (Aug), Canadian GDP (Jul), US Non-Farm Payrolls Annual Revision Prelim. Events: Fed Jackson Hole Symposium (27-29th). Speakers: Fed Chair Warsh; ECB’s Schnabel. Supply: Australia, Japan, Italy. Credit Ratings: Fitch on France; Moody's on Switzerland; S&P on Portugal; Morningstar DBRS on the Netherlands.

Stocks closed higher on Thursday, with gains led by Nvidia (NVDA) following strong earnings, including robust data centre revenue and upbeat long-term guidance. However, gains were not broad-based, with the equal-weight S&P closing lower and every sector finishing in the red aside from Technology, which rallied around 3%.

Oil prices settled in the green amid punchy US-Iran rhetoric. The WSJ reported that US President Trump has no intention of returning to the MoU agreed with Iran in June and intends to keep the blockade in effect. Iran responded by warning it would retaliate against US interests in the region if the blockade remains in place.

T-notes settled lower across the curve, with firmer oil prices weighing on Treasuries. Economic data had little impact, with jobless claims remaining low, while the advance goods trade deficit widened as capital goods imports surged amid elevated demand for AI hardware. Fed speak leaned hawkish, with Schmid and Hammack reiterating their preference for tighter policy, while Collins was more neutral, noting that policy is restrictive and should lead to further disinflation, but that hikes would be warranted if it does not. Goolsbee said he is still trying to determine whether recent inflation shocks are persistent. Meanwhile, the 7-year Treasury auction was broadly average.

In FX, the Aussie outperformed while the Yen lagged, with the Dollar little changed as attention turns to Fed Chair Warsh at Jackson Hole on Friday, alongside the annual preliminary BLS benchmark revisions.

COLLINS (2028 Voter, Neutral): The latest PCE report did not alter her baseline view that monetary policy remains restrictive and should deliver gradual disinflation, though she warned that rate hikes would be warranted if inflation disappoints. She described the latest inflation data as mixed, with the headline stronger than expected but more encouraging underlying details, noting that portfolio management fees had an outsized impact while market-based prices were more consistent with the Fed’s target. Collins sees reasons for inflation to ease absent further tariff and oil shocks and said the recent rise in bond yields remains consistent with price stability rather than signalling an increase in inflation expectations. She is monitoring the move in yields but declined to comment on Bessent’s intervention.

SCHMID (2028 Voter, Hawk): He would probably have supported a rate hike at the July meeting, with inflation remaining stubborn and sticky and the recent energy shock increasingly feeding through to the broader economy. He stressed that the Fed needs to return inflation to 2% but acknowledged it remains unclear how restrictive current monetary policy actually is, leaving policymakers with more information to gather ahead of the next meeting. Schmid also said the midterm elections will have no bearing on the October decision and does not believe the Fed’s credibility has been damaged by recent developments.

HAMMACK (2026 Voter, Hawk): Most recent inflation number was as expected, and that now is the time to act. She does not see Fed policy as restrictive for the economy, and that her view of the neutral rate is higher than other Fed officials. Hammack added that people are worried about the state of inflation and cost of living. The Cleveland Fed president said she goes into every meeting with an open mind, and that she is also open minded about the cadence of Fed meeting schedules.

GOOLSBEE (2027 voter, neutral): Trying to figure out if inflation shocks are persistent. The Chicago Fed President remarked that 3-month inflation does not look terrible, and that a 3% rate and 2% inflation is a loose target where the Fed is headed (likely talking long-term, given 2% inflation goal and c. 3% neutral rate).

ADVANCE GOODS TRADE BALANCE: The US goods trade deficit widened sharply to USD 118.8bln in July (exp. USD 99.0bln, prev. USD 101.4bln), as imports jumped 3.7% M/M while exports fell 2.9%. The details showed the rise in imports was overwhelmingly driven by Capital Goods, which surged 11.3% M/M to USD 140.1bln and are now 46.9% higher Y/Y, while Consumer Goods imports were broadly unchanged (+0.1%). On the export side, weakness was concentrated in Industrial Supplies (-11.2%), which includes petroleum products, partially offset by increases in Consumer Goods (+8.1%) and Capital Goods (+2.9%). Oxford Economics said the deficit was its widest since Q1 2025, with the surge in capital goods imports primarily driven by computers, computer accessories and semiconductors amid continued demand for AI hardware, while weaker oil exports weighed on the export side. Oxford expects AI-related demand to keep capital goods imports strong and said the July data support its forecast for net trade to subtract around 1ppt from Q3 GDP growth, with risks currently skewed towards an even larger drag. Meanwhile, wholesale inventories jumped 1.3% M/M (exp. +0.1%, prev. +0.3%), while retail inventories excluding autos rose 0.7% (prev. -0.5%) - a strong start for inventories in Q3.

JOBLESS CLAIMS: Initial jobless claims (w/e Aug 22nd) fell to 203k from 207k, and beneath the expected 208k; leaving the 4-wk average ticking marginally higher to 205.5k from 204.25k. Continuing claims (w/e Aug 15th) printed 1.778mln (exp. 1.790mln, prev. 1.796mln). The unadjusted figure totalled 169,786, -1.9% W/W and the seasonals had expected a decrease of 0.1% W/W. Oxford Economics notes that the jobless claims data continue to be consistent with its view that the labour market is broadly in balance, with both the demand and supply of workers relatively soft, while layoffs remain low.

T-NOTE FUTURES (U6) SETTLED 2+ TICKS LOWER AT 108-18+

T-notes little changed ahead of Warsh. At settlement, 2-year +2.1bps at 4.230%, 3-year +2.6bps at 4.295%, 5-year +3.4bps at 4.394%, 7-year +3.0bps at 4.518%, 10-year +2.1bps at 4.670%, 20-year +1.9bps at 5.184%, 30-year +1.7bps at 5.189%.

THE DAY: Treasury yields were little changed across the curve on Thursday, rising between 0-3bps. Oil prices extended Wednesday's gains, although there was little follow-through into Treasuries, with participants likely turning their attention to Fed Chair Warsh's remarks on Friday. Yields saw some upside tracking oil higher after the WSJ reported that the US has no intention on returning to the MoU initially signed with Iran in June.

Economic data saw the advance goods trade deficit widen by more than expected, with capital goods imports surging amid strong AI-related demand, while industrial supplies exports declined on weaker oil exports. Meanwhile, jobless claims remained low, consistent with a steady, low-hire, low-fire labour market.

With Jackson Hole underway, focus now turns to Fed Chair Warsh on Friday. In the meantime, Schmid said he probably would have supported a hike in July, noting that inflation remains stubborn and sticky and that it is unclear how restrictive Fed policy currently is. Hammack reiterated that now is the time to act and said she does not view current policy as restrictive for the economy, although she noted that she enters every meeting with an open mind. Collins said she believes policy is restrictive enough and will likely lead to disinflation, but if disinflation is not seen, rate increases would be warranted.

The 7-year auction was broadly in line with recent averages, stopping on the screws, compared with the prior and six-auction average 0.2bp tails. Direct participation jumped notably, although this was offset by a decline in indirect demand, leaving dealers with a roughly average takedown. Overall, the higher outright yield on offer likely provided some support, although the auction was ultimately fairly average - whereas the 2- and 5-year auctions this week saw lower outright yields vs July but remained strong. 

Note, the last two sessions have also seen liquidity briefly evaporate in the US bond market, which traders attributed to a gateway failure at the CME. There was no notable impact on price action, although the sudden bouts of thin liquidity left traders scratching their heads.

SUPPLY

Notes/Bonds

• US sold USD 44bln of 7yr notes; On the screws

Bills

• US sold 4-wk bills at high-rate 3.650%, B/X 2.73x; sold 8-wk bills at high-rate 3.670%, B/C 2.77x
• US to sell USD 100bln of 4-wk bills and USD 90bln of 8-wk bills on Aug. 27th; all to settle on Sept. 1st

STIRS / OPERATIONS

• Fed Hike Pricing via CME FedWatch: Sept 8.5bps (prev. 10.0bps), Dec 27bps (prev. 26.1bps).
• EFFR at 3.63% (prev. 3.63%), volumes at USD 112bln (prev. USD 109bln) on August 26th
• SOFR at 3.64% (prev. 3.66%), volumes at USD 2.859tln (prev. USD 2.916tln) on August 26th
• NY Fed RRP op demand at 0.46bln (prev. 0.70bln) across 8 counterparties (prev. 4) on August 27th

CLOSES: SPX, NDX, DJI, RUT

SECTORS:

EUROPEAN CLOSES: Euro Stoxx 50 -0.73% at 6,424, Dax 40 +0.27% at 26,356, FTSE 100 -0.79% at 10,793, CAC 40 -1.68% at 8,320, FTSE MIB -1.17% at 52,265, IBEX 35 -0.93% at 19,882, PSI -0.60% at 9,389, SMI -1.11% at 14,381, AEX -0.40% at 1,103

STOCK SPECIFICS:

• Nvidia (NVDA): Gave long-term guidance for the first time, & sees stronger-than-exp. rev. growth in FY28, supported by broadening AI demand.
• Salesforce (CRM): Profit topped, strong outlook & AI-related growth accelerated, helped by a large gain on its Anthropic investment.
• CrowdStrike (CRWD): Top & bottom line beat, lifted guidance w/ recurring rev. growth remaining strong, supported by rising demand for AI-related cybersecurity.
• HP (HPQ): Declining PC shipments & weaker margins from rising memory/commodity costs overshadowed strong rev. growth & higher profit outlook.
• Okta (OKTA): Strong Q metrics & lifted FY view.
• Wendy's (WEN): Trian Fund Management currently has no plans to make a take-private bid.
• Dollar General (DG): EPS, rev. & SSS topped.
• Meta (META) to reportedly spend up to USD 10bln a year on Anthropic AI models, NYT reported.
• California AG says Paramount (PSKY) settlement is possible, Co. has to follow the rules, via CNBC TV.
• Rupert Murdoch reportedly contemplates re-merger of Fox (FOXA) and News Corp. (NWSA).

The Dollar Index was more-or-less flat on Thursday, with mixed performance against G10 FX peers. For the Greenback, headlines came via Fed speak at Jackson Hole, albeit little moved the dial, and US data in the form of jobless claims, which ticked lower and beneath expected. Meanwhile, the advance goods trade deficit widened, lead by a sharp rise in capital goods imports given high demand for AI hardware. Heading into Friday, Fed Chair Warsh's address at Jackson Hole symposium is the key highlight. On the geopolitical footing, the main update was reports that the Trump administration has repeatedly told mediators it has no interest in going back to the terms of the MoU it reached with Iran in June.

G10 FX performance vs. the Dollar was either side of the unchanged mark, in pretty light currency specific newsflow. The EUR was unmoved to ECB minutes which were a non event; within them, it was argued that a rate increase would not address the underlying cause of the rise in inflation. The Yen conformed to the general flat trend with not many surprises from BoJ Deputy Governor Himino who’s tone was consistent with pricing of September’s likely 25bps hike, noting in both of his speeches the BoJ needed to “pay more attention to upside inflation risks than before”.