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Summary:
- Japanese markets were closed Monday and Tuesday, with Wednesday also a holiday, contributing to thin regional activity.
- Oil prices rose from Monday’s lows for their first gain in five sessions, with no fresh catalyst identified. Gold traded in a limited range between roughly $4,340 and $4,370.
- Boston Fed President Susan Collins told AP the renewal of Middle East combat in August was a key reason she backed last week’s quarter point rate rise to about 3.9%, and that she has pencilled in a second hike this year.
- ECB’s Philip Lane said, per a Swiss newspaper interview reported by Reuters, that European growth should stay steady provided the energy shock does not intensify, though a second wave of energy price rises will lift inflation before it eases from mid-2027.
- Newly published text of a September 7 podcast featuring RBA Assistant Governor Sarah Hunter showed her saying the case for another rate rise is building, citing Middle East oil costs and demand outpacing supply.
- RBNZ Governor Anna Breman said persistent higher oil prices are expected to lift near-term inflation above the September Statement’s assumptions, with significant risks to the outlook remaining ahead of October’s decision.
- RBA Governor Michele Bullock’s fireside chat comments continued the hawkish tone from her Friday parliamentary remarks, saying supply shocks are difficult for monetary policy to manage and that policy must address second round inflation effects.
- The New Zealand dollar outperformed following Breman’s comments, the Australian dollar found support on Bullock’s remarks, and the US dollar lost modest ground, while major FX was not otherwise a focus.
- British Columbia sued OpenAI and CEO Sam Altman in US federal court, alleging ChatGPT was unsafe and that OpenAI was negligent in failing to alert police to the Tumbler Ridge shooting suspect’s chatbot activity before an attack that killed eight, the Wall Street Journal reported.
It was a quiet session for fresh news out of Asia, with Japanese markets closed Monday and again Tuesday for holidays, and a further holiday scheduled for Wednesday. Oil prices ticked higher from Monday’s lows, posting their first gain in five sessions, though no new driver behind the move was evident. Gold traded within a limited range, moving between roughly $4,340 and $4,370.
A handful of central banker remarks nonetheless filtered through the session. Boston Fed President Susan Collins told the Associated Press that the renewal of combat in the Middle East in August was a key reason she supported last week’s quarter point rate rise to about 3.9%. Collins said she had not seen the inflation progress she had hoped for, has pencilled in a second rate rise later this year, and expects rates to remain unchanged in 2027. She added that businesses in her district remain concerned about high costs, with many expecting to pass those costs on to customers.
European Central Bank Executive Board member Philip Lane, in comments reported by Reuters citing an interview with a Swiss newspaper, said the European economy should continue growing at a steady but moderate pace provided the current energy shock does not intensify. Lane said a second wave of energy price increases will push inflation higher before it declines toward the ECB’s target from the middle of 2027 onward.
Separately, text was published of a podcast interview with Reserve Bank of Australia Assistant Governor Sarah Hunter, recorded September 7, in which Hunter said the case for a further RBA rate rise is building, pointing to Middle East driven oil costs and domestic demand running ahead of supply. Reserve Bank of New Zealand Governor Anna Breman said that if higher oil prices persist, they are expected to result in somewhat higher near-term inflation than assumed in the Bank’s September Statement. Breman said the RBNZ will assess incoming data and global developments ahead of its October decision, and that significant risks to the economic outlook remain. Reserve Bank of Australia Governor Michele Bullock’s early comments from a fireside chat appearance continued the hawkish tone she struck in parliamentary testimony last Friday, with Bullock saying supply shocks are difficult for monetary policy to manage and that policy needs to address the second round effects such shocks have on inflation. Bullock also dropped in that unemployment at 4.5% to 5% is likely to reduce inflation pressure, and that neutral rates are rising around the world.
Major currency pairs were not a particular focus of the session, though the New Zealand dollar notably outperformed following Breman’s remarks, and the Australian dollar found some support on Bullock’s comments. The US dollar lost modest ground over the session.
In stock specific news, British Columbia filed suit against OpenAI and chief executive Sam Altman in US federal court, alleging that ChatGPT was an unsafe product and that OpenAI was negligent in failing to alert police to the Tumbler Ridge shooting suspect’s use of the chatbot before an attack that killed eight people, the Wall Street Journal reported. The case is being closely watched as a test of whether an AI developer can be held to product safety and negligence standards in circumstances where its own staff had raised internal concerns about a user, with the province arguing there is no exemption from ordinary criminal and civil liability principles for AI companies.
This article was written by Eamonn Sheridan at investinglive.com.