Fed Governor Lisa Cook Moves to Challenge Firing

GLOBAL MOOD: Risk- off
Drivers: Trump Fed Firing, Treasury Tariff Surge,

Markets leaned risk-off on Tuesday, reflecting heightened uncertainty from US political developments, including President Trump’s move against Fed Governor Lisa Cook, alongside mixed economic data and earnings updates keeping investors cautious.

TODAY’S WATCHLIST
 - BoJ Nakagawa Speech 
 - Fed Barkin Speech

THE BIG STORY
US Treasury Secretary Scott Bessent said on Tuesday that customs duty revenues from President Donald Trump's tariffs may exceed $500 billion annually, citing a substantial increase from July to August and anticipating an even bigger jump in September. Bessent noted that previous estimates of $300 billion a year were too low, stating, “We had a substantial jump from July to August, and I think we're going to see a bigger jump from August to September… we could be on our way well over half a trillion, maybe towards a trillion-dollar number.” The Treasury reported $29.6 billion in combined customs and excise taxes collected so far in August, matching the total for all of July.

Meanwhile, embattled Federal Reserve Governor Lisa Cook announced plans to file a lawsuit to prevent her removal by President Trump, challenging what her legal team described as an “illegal action” lacking factual or legal basis. Her lawyer, Abbe Lowell, indicated that the case could trigger a prolonged legal battle over the White House's attempt to influence U.S. monetary policy.

Data Spotlight
New orders for key US manufactured capital goods rose strongly in July, signalling a solid start to business spending in the third quarter despite growing concerns over the labour market. Shipments of non-defence capital goods excluding aircraft, a key gauge of business investment, posted their largest increase in more than two years. Core capital goods orders climbed 1.1% last month following a revised 0.6% decline in June, reflecting robust investment activity even as businesses faced rising costs from import tariffs. Meanwhile, US crude oil inventories fell by 0.974 million barrels in the week ending August 22, slightly below expectations of a 1.7-million-barrel decline, after a larger 2.4 million-barrel draw the previous week. 

Takeaway: The data points to resilient US business investment driving economic activity, although caution persists as labour market concerns and rising costs continue to cast uncertainty over broader growth.

WHAT HAPPENED OVERNIGHT

• US Stocks rises as Nvidia, Eli Lilly boost sentiment amid Fed uncertainty
  
  • S&P 500 ended higher on Tuesday, supported by gains in Nvidia and Eli Lilly.
  • Nvidia rose 1.1% ahead of its quarterly report on Wednesda
  • Eli Lilly jumped nearly 6% after reporting its experimental diabetes pill reduces body weight by 10.5%.

• US Treasury yields edge higher amid Fed independence concerns
  
  • The 10-year US Treasury yield fell 1.7 basis points to 4.258% amid Fed independence concerns.
  • PCE inflation data awaited later this week, driving investor caution.
  • Political volatility from Fed Governor Lisa Cook’s firing added market uncertainty.

• US dollar slips on Fed independence concerns
  
  • US Dollar Index fell against major currencies on Tuesday amid concerns over Fed independence

• Crude oil prices pull back amid tariff Concerns
  
  • Brent crude oil fell 2% on Tuesday as investors monitored developments around US tariffs.

Day’s Ledger

Economic Data

• RBA Payments System Board Meeting
• Euro July New Car Registrations 
• South Korea Interest Rate Decision

Corporate Actions

• ACME Solar to consider fund raising 
• LKP Finance to consider fund raising

Policy Events

• Fed Barkin Speech
• BoJ Nakagawa Speech

Tickers to Watch

• ADANI GROUP firms win CCI nod for Jaiprakash Associates acquisition
• DR REDDY’S secures HC stay on tax reassessment linked to merger case
• ESCORTS KUBOTA launches Kubota MU4201, debuts in new horsepower range
• GRAPHITE INDIA lifts stake in Godi India through rights issue
• HCL TECH teams up with UK’s Thought Machine to modernise banking systems
• ICRA upgrades WOCKHARDT long-term facilities rating to BBB from BBB minus
• J&K BANK reappoints Sudhir Gupta as executive director from mid-December
• Moody’s affirms ONGC ratings at Baa3 for local and foreign currency debt
• NEWGEN SOFTWARE wins order for scanning and digitisation services
• OIL INDIA and BPCL sign pact for gas distribution project in Arunachal
• ONGC sets up internal team to explore crude and refined fuels trading unit
• SAIL supplies critical-grade steel for two Indian Navy warships
• UNITED BREWERIES to add canning line at Telangana brewery

MUST READ: 

• Suzuki Motor to invest $8 billion in India, begins first EV production
• SEBI's Derivatives Pullback Will Drive Speculation Offshore
• Trump Tests the Guardrails of US Credibility
• Which Sectors Will US Tariffs Hit Most and How to Brace for it
• If it Ain’t Broke, Don’t Fix it
• Fed Governor Cook will sue to keep her job as Trump mulls replacement
• France plunges back into crisis after PM Bayrou's confidence-vote backfires
• India Plans Homegrown Missile Shield by 2035, Top General Says
• Why Modi Is Turning to Tax Cuts to Offset US Tariff Hit to India
• 'Powerful optics': China's Xi to welcome Putin, Modi in grand show of solidarity

See you tomorrow with another edition of The Morning Edge.

Have a great trading day.

Inflation isn’t abstract. It’s dal, rice, vegetables, and oil on a plate.

As the debate rages over whether the RBI should exclude food from its inflation target, Srinath Sridharan argues the central bank must hold its ground. Inflation is not just a number. It is the lived reality of every Indian household.