MARKET WRAPS

Watch For:

Durable Goods for July; Pending Home Sales for July; EIA Weekly Petroleum Status Report; Royal Bank of Canada 3Q earnings; Natl Bank of Canada 3Q.

Opening Call:

Stock futures wobbled on Wednesday with the market on track for more bumpy trading in advance of a much-anticipated speech from Federal Reserve Chairman Jerome Powell on Friday, which investors will be monitoring closely for critical clarity on central bank policy.

Stock and bond markets continue to whipsaw ahead of Powell's speech Friday at the Jackson Hole conference, where traders hope the central bank chief will give the market much-desired clarity on the Fed's monetary policy pathway.

The central bank already has moved aggressively to tighten financial conditions this year, enacting the largest interest-rate hikes in decades as it tames inflation at 40-year highs.

A stock market rally in July was largely based on optimism that the Fed had reached peak hawkishness, but this narrative has come under pressure in August amid signs of the Fed's continued commitment to fight rising prices.

"Despite the best efforts of data releases, U.S. rates markets just do not want to fundamentally re-price the outlook until Chair Powell's remarks this Friday at Jackson Hole," said Tim Wessel, an analyst at Deutsche Bank.

"The retracement of every rally following downside data surprises, along with the build up in short policy futures positions, suggests that the market is looking for a very hawkish tone from the Chair."

Stocks on the move: Bed Bath & Beyond, whose shares have been on a rollercoaster in recent weeks, jumped 16% in premarket trading after the company secured a loan to build cash and pay down debt.

Overseas, European stocks were in the red while markets in Asia were mixed.

Market Insight:

Choppy trading in rates markets around current levels wouldn't surprise Mizuho. Wednesday is the last session before the Fed's annual economic symposium in Jackson Hole.

Mizuho said market participants may also want to square up their positions ahead of risk events on Thursday-Friday.

Investors are selling eurozone government bonds, with the 10-year German Bund and French OAT yields both trading almost four basis points higher, according to Tradeweb.

Forex:

The dollar recovered on Wednesday from the previous day's falls after U.S. purchasing managers' surveys showed a bigger-than-expected drop in services activity as investors again focus on U.S. rate-increase prospects.

The dollar "has been grinding steadily higher overnight and DXY has now regained around 2/3 of the losses seen on the weaker services PMI data yesterday," RBC Capital Markets said.

Attention is shifting to Fed Chairman Jerome Powell's speech set for Friday at the annual Jackson Hole symposium, the Canadian bank said.

Minneapolis Fed President Neel Kashkari on Tuesday warned of "the risk of unanchoring inflation expectations," and most analysts expect that Powell will reiterate that further rate increase are needed.

Bonds:

Within developed-market rates, "it is fair to say that no bond is in favour at the moment," ING said.

The Dutch bank notes that there has been a broad-based rise in government-bond yields recently, accompanied by a "toxic" rise in both implied volatility and market inflation expectations.

"The former suggest an eroding of government bonds' safe-haven status, the latter show the return to persistent inflation concerns," ING said.

A rise in inflation swaps even as markets are pricing a higher path for central-bank interest rates is a worrying sign and suggests that "even more aggressive hikes will fail to get inflation under control," the bank said.

Energy:

Oil prices steadied following a nearly 4% surge in the prior session on worries about a possible production cut from OPEC+.

Both varieties had jumped slightly less than 4% on Tuesday after Saudi Arabia, the de facto leader of OPEC, said the cartel was ready to cut output to correct a decline in oil prices and keep prices supported.

The kingdom's energy minister said the market was suffering from "extreme volatility" partly because of low liquidity. Most analysts said oil prices have fallen because of recession worries.

Metals:

Base metals weaken on concerns about slowing demand and a stronger dollar. Weak economic data continues to weigh on base metals, demand for which is heavily correlated with strong economic growth.

Expectations for tighter monetary policy in the U.S. is also lifting the dollar, further weighing on dollar-denominated metals. The ICE Dollar Index is close to its highest level in 20 years.

"We see further macro-driven downside risk in the copper market as our strategists warn of further upside in both yields and the dollar," Goldman Sachs said.


TODAY'S TOP HEADLINES


Federal Trade Commission Drops Mark Zuckerberg From Antitrust Lawsuit

The Federal Trade Commission said it would drop Mark Zuckerberg from a lawsuit filed last month seeking to block Meta Platforms Inc. from buying a small virtual-reality company.

In return, the Meta chief executive agreed not to purchase the startup, Within Unlimited Inc., and its fitness app called Supernatural, in his personal capacity or through any other entities he controls, according to a court document filed Tuesday.


Bed Bath & Beyond Clinches Loan Deal

Bed Bath & Beyond Inc. has found a financing source to shore up its liquidity as it tries to weather recent missteps, according to people familiar with the matter.

The company on Tuesday told prospective lenders that it has selected a lender to provide a loan following a marketing process conducted by JPMorgan Chase & Co., people familiar with the matter said.


Twitter Comes Under Washington Spotlight With Whistleblower Complaint

WASHINGTON-A whistleblower's complaint opens up new political and legal challenges for Twitter Inc. in Washington, as lawmakers and regulators examine possible responses to the social-media company's alleged missteps.

The complaint from former Twitter security executive Peiter Zatko was filed to the Securities and Exchange Commission, the Federal Trade Commission and the Justice Department, which are expected to investigate.


Richemont Reaches Deal to Sell YNAP Stake to Farfetch

Swiss luxury-goods group Cie. Financière Richemont SA said Wednesday that it has agreed to sell a majority stake in Yoox-Net-A-Porter to Farfetch Inc. and Dubai-based investor Mohamed Alabbar, securing a deal--first flagged at the end of last year--that could see Farfetch assume full ownership of YNAP in the future.

British-Portuguese e-commerce platform Farfetch will acquire an initial 47.5% stake in peer YNAP in return for 53 million-58.5 million of its own shares, or around 12%-13% of its issued share capital, Richemont said.


Telenor Shakes Up Executive Management

Telenor ASA said Wednesday that it is strengthening its Nordics and Asia regions management by combining its units into two groups, and is creating new units for infrastructure and adjacent services.

The Norwegian telecommunications provider said that all four of its Nordic business units in Norway, Sweden, Denmark and Finland will be brought together under new head of Telenor Nordics, Petter-Borre Furberg.


Big Oil's Message to Investors: You're Too Pessimistic

Saudi Arabia and Goldman Sachs agree: Investors have the oil market all wrong.

Money managers bracing for a global slowdown have pulled back from bets on oil and other commodities, helping push prices lower. But their focus on potentially waning demand isn't shared with some of the most powerful figures in the industry, or with investment banks, who point to a host of other reasons why prices should be higher.


Chinese Developers Lean on Government Bond Guarantees as Doubts Persist

Chinese regulators are attempting to revive a sagging property market with new bond guarantees for a select group of developers. Investors think it will take a lot more to pull the real-estate sector out of its deepest slump in years.

Many of the country's real-estate companies are struggling. More than 30 have defaulted on their dollar-denominated bonds, and even the strongest private-sector developers have faced challenges selling new debt as their bond prices have tumbled and yields have soared. In recent days, a flurry of large and small Chinese developers have put out profit warnings.


Fed's Kashkari Says No Time To Back Off On Inflation Struggle

Federal Reserve Bank of Minneapolis President Neel Kashkari says the U.S. central bank needs to press forward with tighter monetary policy until it is clear that very high levels of inflation are moving back down.

"When inflation is 8% or 9%, we run the risk of un-anchoring inflation expectations," Mr. Kashkari said at an appearance Tuesday, and if that happened, the Fed would likely have to embark on very aggressive rate rises to restore balance.


U.S. Military Strikes Bunkers in Northeast Syria Used by Groups Affiliated With Iran

WASHINGTON-The U.S. military said it struck ammunition and logistics bunkers Tuesday in northeast Syria used by groups affiliated with Iran's Islamic Revolutionary Guard Corps.

Four jet fighters carried out the strikes near Deir Ezzour, in northeast Syria, dropping nine bombs on nine bunkers where Iranian-backed groups operate, military officials said. The strikes Tuesday were in retaliation for attacks U.S. military officials said were conducted by Iranian-backed groups on Aug. 15 at the al-Tanf garrison in southern Syria, and an area known as Green Village in northeast Syria.


Charlie Crist Wins Democratic Primary for Florida Governor, Set to Face Ron DeSantis

U.S. Rep. Charlie Crist secured the Democratic nomination for governor in Florida, setting up what promises to be an uphill battle against incumbent Gov. Ron DeSantis, a rising Republican star with a formidable fundraising advantage.

(MORE TO FOLLOW) Dow Jones Newswires

08-24-22 0609ET