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On Thursday, the presidents of the U.S. and China, Donald Trump and Xi Jinping, will meet in Washington to discuss the future of bilateral relations between the two powers. Key issues on the agenda include trade matters such as tariffs, rare earths and semiconductors, Taiwan and the technology race, as well as the various armed conflicts currently underway, particularly in the Middle East.

Our Take The meeting will be critical to reducing uncertainty surrounding relations between the two countries, although we do not expect definitive agreements on the most sensitive issues. The exception could be trade, where we expect Trump and Xi to extend the current trade truce, which is set to expire in early November.

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On the sidelines of the United Nations General Assembly, President Donald Trump did not rule out meeting with his Iranian counterpart, Masoud Pezeshkian. He could also hold talks with other Persian Gulf leaders to narrow differences and explore a path toward resolving the regional conflict, whose impact on energy prices has fueled a renewed rise in global inflation.

Our Take A rapprochement between the parties could reduce the geopolitical risk premium embedded in oil prices, which have risen nearly 20% since the beginning of the month. A pullback in crude would ease inflationary pressures and benefit both bond markets, which have recently been weighed down by rising yields, and equities.

Scope Ratings downgraded France’s sovereign credit rating from “AA” to “A+,” citing rising debt, wide deficits, higher financing costs and limited progress on fiscal reforms. At the same time, it revised its outlook from “negative” to “stable,” noting that fiscal risks continue to rise but that the current rating provides sufficient buffer against further shocks.

Our Take The downgrade confirms France’s fiscal deterioration and could keep its sovereign bond yields under pressure. Although the stable outlook reduces the risk of another immediate downgrade, restoring confidence will require credible measures to contain the deficit and stabilize debt.

The Chicago Fed National Activity Index fell from 0.08 in July to -0.04 in August. Two of its four broad categories declined, and one made a negative contribution, while the three-month moving average improved from -0.01 to 0.01.

Our Take The negative reading indicates that the economy grew slightly below trend in August, although the improvement in the three-month average rules out, for now, a broad-based deterioration. The result points to moderating activity, more consistent with potential growth than with a contraction scenario.

Corporate News

SoftBank is seeking to raise more than $11 billion in what would be one of the largest high-yield bond offerings on record, partly to finance its investments in OpenAI.

Shares of Accenture rose as much as 6.1% in premarket trading after the consulting firm was selected by Anthropic to assess the safety of its advanced artificial intelligence models.

Shares of Critical Metals, which is acquiring a rare-earth deposit in Greenland, surged as much as 30% after Trump said he had reached a deal with Denmark that would grant the U.S. “permanent control over Greenland’s security.”

The “To-Do List”

  • Keep an eye on U.S. retail diesel prices, which topped $6.50 per gallon for the first time.

  • Watch for any further signals of a potential meeting between Trump and the Iranian president on the sidelines of the UN General Assembly.

  • To start the week, complete three rounds of 12 shoulder presses with bottles, 12 bent-over rows and 12 overhead triceps extensions, resting 20 seconds between exercises.

  • Remember that Mexico celebrates National Lucha Libre and Mexican Professional Wrestlers Day today.

Quote of the Day…

“China is a sleeping giant. Let her sleep, for when she wakes, the world will tremble”...Napoleon Bonaparte (attributed)