Close to a spy

President Donald Trump’s recorded comments at a closed-door gathering with U.S. diplomats seem set to add fuel to Democrats’ impeachment drive. Trump is seen describing the whistle-blower as “close to a spy” and demanded to know who the person is, in a video of the event obtained by Bloomberg News. The release of the complaint and testimony by acting intelligence chief Joseph Maguire yesterday raised the specter of a White House “cover up” according to House Speaker Nancy Pelosi. House Intelligence Chairman Adam Schiff said it gave “a pretty good road map of allegations we need to investigate.” The S&P 500 Index closed lower for the fourth time in five days as the political turmoil damped demand for risk assets.

Four-year low

The European Commission’s monthly economic sentiment indicator dropped to the lowest level since 2015, with the industrial confidence sub-index plumbing a six-year trough. A slowdown in Germany continues to be one of the biggest drivers of the worsening performance, with the DIW Institute forecasting the region’s largest economy is already in a recession. European Central Bank Chief Economist Philip Lane said policy makers still have room to cut rates further if needed.

Little hope

Even by the standards of recent EU-U.K. meetings, expectations for a breakthrough at today’s meeting between the two sides are very low. European officials have all but given up hope of finding a way forward in the coming weeks as Prime Minister Boris Johnson’s inflammatory rhetoric against his domestic opponents is seen as a hindrance. There was some good news for the embattled prime minister as he won a High Court case in Northern Ireland which had sought to have a no-deal Brexit declared a violation of the Good Friday peace accord. The pound weakened after Bank of England policy maker Michael Saunders said a rate cut may be needed even if a no-deal Brexit is avoided.

Markets mixed

Overnight, the MSCI Asia Pacific Index slipped 0.6% while Japan’s Topix index closed 1.2% lower after inflation data came in below expectations. In Europe, the Stoxx 600 Index was 0.5% higher by 5:45 a.m. Eastern Time with miners leading the gains, while London’s FTSE 100 Index was the region’s best performer due to the falling pound. S&P 500 futures pointed to a gain at the open, the 10-year Treasury yield was at 1.71% and gold dropped.

Coming up…

The August PCE report, published at 8:30 a.m., is expected to show a jump in income growth to 0.4% from a month earlier, with spending growth softening to 0.3% and the PCE inflation gauge increasing to 1.8%. Durable goods orders, published at the same time, are forecast to drop 1.0%. Consumer sentiment figures for September are released at 10:00 a.m. with the latest Baker Hughes rig count at 1:00 p.m.