AUSSIE BONDS: AUCTION PREVIEW: ACGB Dec-34 Supply Due

The Court of Appeals for the Federal Circuit has upheld that decision by a 7–4 majority, saying the emergency powers law Trump relied on — IEEPA — which was never meant to authorize tariffs. Where does Trump go from here and what are his options should the Supreme court uphold the judgement ? Alexander Stahel wrote a thread on X expanding on Trump’s possible alternatives: https://x.com/BurggrabenH/status/1961978205084012795

• “Trump’s “Liberation Day” tariffs rested on the International Emergency Economic Powers Act (IEEPA), a law that gives presidents sweeping authority to act during genuine national emergencies involving foreign threats — freezing assets, blocking sensitive goods, and so on. But as two federal courts have now made clear, it was never meant to cover tariffs. Unless the Supreme Court reverses those rulings, this door is effectively closing.” 
• “IEEPA is not the only tool available. The other big weapon is Section 232 of the Trade Expansion Act, the so-called national security tariff authority. Trump used it in 2018 to impose tariffs on steel and aluminum, arguing they were essential to national security.” 
• “A third possibility is Section 301 of the Trade Act of 1974, which allows tariffs in response to unfair trade practices by specific countries. Lighthizer (Trump 1.0)  leaned heavily on this authority in his first term, especially against China, citing intellectual property theft and forced technology transfers. But Section 301 is narrower: it targets specific offenders, not the world at large. It should justify tariffs on China, but not a blanket 15% levy on the EU, 39% on Switzerland, or dozens of others.”
• “Finally, there is Congress. Under the Constitution, tariffs are Congress’s prerogative. If Trump wanted to go further than the existing laws permit, he would need Congress to pass new legislation. Given today’s polarization, with Democrats firmly opposed and many Republicans split on tariffs, it seems unlikely that Congress would hand him additional powers.”
• “Bottom line? Under IEEPA, the courts are saying no — with the Supreme Court judgment likely by the summer of 2026. Then, sadly, the saga likely continues under different laws. Time will tell.”

Japan Q2 capex was a touch above market expectations. The headline figure rising 7.6%y/y, against a 6.1% forecast, while Q1's outcome was 6.4%. Ex software capex was also above expectations, up 5.2%y/y, against a 4.9% forecast, but down from Q1's pace of 6.9%. Company sales were up 0.8%y/y in Q2, against a 1.4% forecast and 4.3% prior. Profits were 0.2%y/y, against the -0.4% forecast and 3.8% gain in Q1. 

• The detail on the capex side should manufacturing up 16.4%y/y in Q2, with ex software up 17.0%y/y. In the quarter capex was up 1.6%, led by manufacturing's 6.3% rise.
• The chart below plots the headline capex result against the Tankan survey of capex estimates (which is the white line in the chart). This continues to paint a resilient backdrop, with the Q3 Tankan survey out at the start of Oct and likely to be a key watch point for the BoJ.
• On the profit side, weakness in manufacturing -11.5%y/y, weighed on the overall result.
• For sales, manufacturing and non-manufacturing slowed in y/y terms relative to Q1.  

Fig 1: Japan Capex & Tankan Capex Expectations 

Source: Bloomberg Finance L.P./MNI 

Gold prices rose 0.9% on Friday to $3447.95/oz after July US core PCE prices printed in line with expectations and August consumer confidence fell to a 3-month low lifting the pricing for a September Fed rate cut. Bullion rose 2.3% last week driven by further infringements on Fed independence and expectations for the resumption of easing in September. It finished up 4.8% in August.

• Whether Governor Cook can be removed by President Trump will be decided by the courts with the Fed saying it will abide by a legal ruling.
• Gold fell to $3404.41 before rising to a high of $3453.98 on Friday, breaking above initial resistance at $3439, 23 August high. It has started today holding above this level at $3444.0. The medium-term trend remains bullish and if this break is sustained then the bull trigger at $3500.1 is exposed. Initial support is at $3311.6, 20 August low.
• Silver outperformed rising 1.7% to $39.719 after reaching $39.971. It finished the week up 2.1% and was 8.2% higher in August. It is currently around $39.819, holding above initial resistance at $39.655 which opens $40.000. A clear break of the 50-day EMA at $37.449 is needed for a stronger short-term bearish threat.
• The US dollar and 2-year yield were slightly lower. Equities were weaker with the S&P down 0.6% and Euro stoxx -0.8%. The S&P e-mini has started today up 0.2%. Oil prices fell with WTI -0.9% to $64.01/bbl. Copper rose 1.1%.