ENERGY SECURITY: *ZELENSKIY: UKR NEEDS US SUPPORT FOR SECURITY GUARANTEES: Bbg

• In broad terms, Greene speech is very much in line with those she made earlier this month ahead of the Treasury Select Committee.
• We don't think there is much in here to suggest she will switch from voting for a hold in August (that was dissent against the 25bp cut). So expect her to vote for a November hold unless there is something very, very significant in the data.
• Highlights of the speech:
• "I believe an appropriate response to the uncertainty and risks we are currently facing should involve a cautious approach to rate cuts going forward." Note that "cautious" is an MPC buzzword which suggests that rate cuts have a higher bar than "careful". She has used the "cautious" word before.
• "For me personally, identifying the lessons we’ve learned from recent supply shocks is not just an academic exercise. These lessons also inform my thinking about the current conjuncture, and in my view suggest that the risks to our inflation outlook have shifted to the upside."
• "The MPC expects services inflation to flatline at around 5% through the end of this year and core inflation has been flat since Q2 2024 and is expected to remain so through 2025. Disinflation has so far been concentrated in interest rate sensitive sectors, which suggests that the bulk of disinflation may have already come through. Meanwhile, underlying activity has remained weak with the labour market loosening and slack emerging. On the face of it, the data has the hallmark of an adverse supply shock."
• "While the wage setting process may not have changed this time, the price setting process may have. According to the DMP, firms’ year-ahead own price expectations remain more sensitive to upside inflation surprises."
• "The risks of weaker demand have not disappeared, but to my mind they have diminished. I remain worried about weaker consumption and a higher savings ratio than we are expecting—so much so that I gave a whole speech on these dynamics almost exactly a year ago. But I am less concerned about a rapid decline in the labour market... We expect GDP growth to rebound going forward, so if this relationship holds then a significant downside risk to the labour market should not materialise."

A meeting between US Secretary of State Marco Rubio and Russian Foreign Minister Sergei Lavrov is underway on the margins of the United Nations General Assembly in New York City.

• The pair's first meeting since the August 15 Alaska Summit comes after US President Donald Trump signaled frustration with Russian President Vladimir Putin in a Truth Social post describing Russia as a 'paper tiger' and suggesting Ukraine could recover all occupied territory.
• Rubio, a Russia hawk, offered a similarly pointed message to Russia at a United Nations Security Council Ministerial Meeting on Ukraine yesrterday. Rubio said Trump is "a very patient man, he’s very committed to peace, but his patience is not infinite," noting that Trump has "the opportunity and the options of imposing additional economic costs on the Russian Federation."
• Neither Trump nor Rubio has previewed any potential steps that could be taken to penalise Russia. The prevailing view amongst analysts is that the Trump administration is likely to leave most of the heavy lifting to Europe, but the US may be positioning to change tack if Russia continues to obfuscate the ceasefire process and escalates incursions into NATO airspace.
• A previous meeting between Rubio and Lavrov at the ASEAN Foreign Ministers' meeting in Malaysia in July helped lay the groundwork for the August 15 summit in Alaska. 

• Tsy futures trade weaker (FVZ5 -5 at 109-09.75; TYZ5 currently -7 at 112-21) ahead of the $70B 5Y note auction (91282CPA3) at 1300ET, WI is currently running at 3.707%, 1.7bp rich to last month's tail.
• August auction recap: Tsy futures dipped (FVZ5 at 109-12 from 109-12.75 at the cutoff) after the latest $70B 5Y note auction (91282CNX5) tailed: 3.724% high yield vs. 3.716% WI; 2.36x bid-to-cover vs. 2.31x prior.
• Peripheral stats: Indirect take-up 60.48% from 58.28% prior, directs rose to 30.74% vs. 29.50% prior, primary dealer take-up retreated to 8.78% vs. 12.29% prior.