US DATA: Narrower Trade Deficit Amid Weaker Consumer Imports In Tariff Era

US President Donald Trump is shortly due to convene a meeting of his Cabinet at the White House. LIVESTREAM. The White House press pool will be in the room for questions at the top of the meeting, most of which are likely to concern Trump’s move to fire Federal Reserve governor Lisa Cook.

• Trump announced on Truth Social yesterday that he had removed Cook from her position, “effective immediately,” citing ‘for cause’ over “false statements on one or more mortgage agreements.” Most outlets have reported the move as an “attempt” to fire Cook, rather than a done deal, reflecting uncertainty over the legality of the firing.
• The Post notes: “The firing, if successful, could give Trump a majority of allies on the Fed board and allow him to fulfill his goal of lowering interest rates, even as the Supreme Court has pushed back on his attempts to exert direct control over the independent and powerful body.”

The Richmond Fed's 5th District surveys of manufacturing and services firms showed an improvement in current activity across the board, though it was more definitive in the case of services. The Richmond Fed characterized the manufacturing survey as showing activity "remained soft", while that of services "improved slightly". In addition, manufacturing firms reported stronger price pressures than services firms, which may help account for the sectoral divergence.

• The manufacturing composite index rose to a 5-month best -7 in August from an 11-month low -20 prior. New orders stood out with a jump to -6 from -25 prior, marking a 6-month high, while shipments, employment and wages also improved.
• That said, expectations fell sharply, to a 5-month worst -10, from -2 prior, with capex falling as well. Local business conditions indices largely mirrored the aggregate indices.
• The services local conditions composite showed significant improvement: at 6 in August, it marked the highest level since December 2024 and a 5th consecutive month of improvement (-8.0 prior), and expectations also improved for a 5th month, to 11.0 (6.0 prior), marking the highest since January. Revenues rose to 4 from 2 prior, with demand and capex also picking up, with expectations doing likewise across the board.
• The only real soft spot in services was in employment which remained flat, despite a pickup in wages.
• With little further detail or color available aside from the Richmond fed aside from the survey data results, the main conclusion to reach here is that services firms are faring better than manufacturing counterparts in the higher-tariff regime.

Christopher Miller, the Financial Times' Ukraine correspondent, reports on X: "Russian forces have seized control of two villages in Ukraine's Dnipropetrovsk oblast – Zaporizke and Novoheorhiivka – making them the first villages in that region to fall to Russia," per Ukrainian war tracking group Deepstate UA.

• The symbolic breakthrough in the frontline comes as the ceasefire process, kick-started by US President Donald Trump with a pair of summits in Alaska and Washington, appears to have delivered little progress towards a bilateral meeting with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskyy.
• Russian Foreign Minister Sergei Lavrov reiterated in an NBC interview on Sunday that, “Putin is ready to meet with Zelenskyy," but "this agenda is not ready at all.” Trump conceded yesterday that personal animosity is preventing a meeting: “[Putin] doesn’t like [Zelenskyy]. I have people I don’t like, I don’t like to meet with them.” Trump added later: “That’s going to be up to them. It takes two to tango...”
• Zelenskyy said in a statement on X, after a meeting with UK security officials in Kyiv today: "We [...] discussed in detail the efforts ... on security guarantees for Ukraine and the developments within the Coalition of the Willing."
• Finnish President Alexander Stubb told reporters earlier that a call between US Secretary of State Marco Rubio and European foreign ministers yesterday "focused on security guarantees for Ukraine and the US role in them," but optimism that Russia will engage with the ceasefire process appears to have evaporated.