Geopolitical Tensions Persist, Fed Officials Debate Policy; US Equity Futures Mixed

## Lead Geopolitical tensions remain a key focus with reports of Iran hitting two tankers and Ukraine's urgent need for air defenses. Meanwhile, Fed officials Hammack and Kashkari have voiced differing opinions on inflation and monetary policy. US equity futures are mixed, with Nasdaq futures up 0.87% and S&P futures up 0.17%. ## Session narrative US equity futures are showing mixed performance in pre-market trading. Nasdaq futures are leading gains, up 0.87%, while S&P futures are up 0.17%. Dow futures are also positive, gaining 0.34%. This comes amid ongoing geopolitical concerns. Reports indicate Iran has hit two tankers, adding to regional instability. Ukraine's envoy to the US has warned that Kyiv urgently needs anti-ballistic missiles before winter, as Russian attacks intensify, stating that Ukraine cannot wait years for domestic production to begin. In economic news, Eurozone Core CPI for July rose to 2.5%, exceeding forecasts, while overall CPI met expectations at 2.9%. French CPI YoY NSA Prelim also came in higher than forecast at 2.1%. Several Federal Reserve officials have made statements today. Fed's Hammack suggested that now is the time for the FOMC to act to speed inflation to 2%, expressing a lack of confidence that inflation will hit 2% on its own. Conversely, Fed's Kashkari issued a statement on his FOMC dissent, indicating he preferred to raise the funds rate by 0.25%. Kashkari also noted that if inflation durably fades, a strategy of small steps would allow the FOMC to slow or pause subsequent adjustments without unnecessary impact on the real economy. Japan has also reportedly spent over Y6 trillion on currency intervention. ## Cross-asset check In currencies, the US Dollar Index is up 0.48% today. EUR/USD is down 0.31%, while USD/JPY is up 0.48%. In commodities, WTI crude is up 2.38%, and Brent crude is up 1.34%. Gold is down 1.45%, and silver is down 1.81%. The US 10-year yield is up 0.79%. Long-duration Treasuries (TLT) are down 0.24%. The VIX is up 1.17%. ## Themes & continuing stories Geopolitical tensions remain a dominant theme, with developments in the Middle East and Ukraine continuing to influence market sentiment. The divergence in views among Federal Reserve officials regarding the appropriate path for monetary policy is another key story, highlighting the ongoing debate about inflation and economic growth. Inflationary pressures, particularly in the Eurozone, are also a continuing focus for markets, with recent CPI data indicating persistent price increases. ## What’s ahead The primary focus for the immediate future will be the US market open and how these various geopolitical and economic factors translate into trading activity. Market participants will be watching for further developments in the ongoing geopolitical situations and any additional commentary from central bank officials.