US Government Avoids Shutdown Risk; Geopolitical Game in the Strait of Hormuz Escalates

Summary:

US House passes a stopgap funding bill to avert a government shutdown; the US launches a new round of strikes against Iran, with Trump calling the action appropriate...

【Highlights】

1. US House Passes Stopgap Funding Bill to Avoid Government Shutdown

2. US Launches New Round of Strikes Against Iran; Trump Calls Action Appropriate

3. Iranian Armed Forces Vow to Make US Pay a Heavy Price

4. Iran: Will Not Allow US Attempts to Pass Ships Through Southern Route of Strait of Hormuz

5. Putin: Negotiation Process on Ukraine Issue Remains Frozen

6. Barr: Interest Rates Should Be Raised If Inflation Fails to Recede Quickly

7. US August ISM Manufacturing Index Misses Expectations; US July Job Openings Rebound Slightly

【Details】

US House Passes Stopgap Funding Bill to Avoid Government Shutdown

On September 1 local time, the US House of Representatives passed a federal government stopgap funding bill to avert a government shutdown on October 1 and sent the measure to US President Donald Trump for his signature. Current federal funding is set to expire on September 30. On August 8, the US Senate passed a stopgap funding bill by a vote of 90 to 6, allowing most federal agencies to continue operating at current funding levels through December 11.

US Launches New Round of Strikes Against Iran; Trump Calls Action Appropriate

US forces launched a new round of strikes against Islamic Revolutionary Guard Corps targets inside Iran on Tuesday. Trump subsequently posted on social media, emphasizing that the latest US strikes against Iran were appropriate retaliatory measures in response to Iran's attempts to lay mines in the Strait of Hormuz and its missile launch targeting a US military base in Jordan.

Trump pointed out that the US strikes were massive in scale and power, targeting Iranian radar systems. He noted that all eight missiles fired by Iran at the US base in Jordan were intercepted, warning that if Tehran retaliates, the US will launch an even larger attack. He added that an ultimate strike is waiting in the wings, and once executed, little of Iran will be left. Trump remarked that agreements with Iran are worthless and that the US has given Iran ample opportunities.

US Treasury Secretary Scott Bessent stated that as part of economic actions against Iran, the US may announce sanctions against an Iranian bank this week. "We may announce sanctions against one bank this week and another next week. We are in communication with our allies, and they have responded actively; we have received widespread support," he noted.

Iranian Armed Forces Vow to Make US Pay a Heavy Price

On the evening of September 1 local time, the General Staff of the Iranian Armed Forces issued a statement declaring that in response to US attacks on multiple locations in Iran's Sistan-Baluchestan and Hormozgan provinces, the Iranian Armed Forces will deliver a crushing blow to the US enemy. The statement stressed that the more recklessly US forces act in the region, the heavier the losses they will suffer, and Iran will make the US enemy pay a heavy price.

Iran: Will Not Allow US Attempts to Pass Ships Through Southern Route of Strait of Hormuz

Iranian Parliament Speaker Mohammad Bagher Ghalibaf stated that Iran will never allow the US to violate the memorandum of understanding by attempting to pass ships through the southern route of the Strait of Hormuz. Ghalibaf noted that prior to the conflict among the US, Israel, and Iran, at least 120 vessels passed through the strait daily, whereas current traffic is far below pre-war levels, and the strait remains fully under Iranian military control. He said US attempts to navigate several ships through the passage met with Iranian resistance. Ghalibaf questioned why the US continues to attack Iranian islands if it truly controls the strait, asserting that Americans falsely claim ships can pass through even as those vessels come under attack. He emphasized that Iran controls the battlefield and has made the enemy realize it cannot stop Iranian missiles, adding that Iran will gain absolute qualitative and quantitative dominance in the upcoming phase.

Putin: Negotiation Process on Ukraine Issue Remains Frozen

In the early hours of September 2 local time, Russian President Vladimir Putin held a press conference prior to concluding his visit to Kyrgyzstan. Addressing the negotiation process regarding the Ukraine issue, Putin pointed out that any talks must contain substantive content, and the current negotiation process remains frozen. Putin also noted that US Special Envoy Steven Witkoff and Jared Kushner remain welcome in Russia, and Moscow is pleased to work with them. Turning to battlefield developments, Putin indicated that Russian forces have been instructed to prepare for large-scale strikes against Ukrainian energy infrastructure, stating, "They attack our factories, and they will receive a response." Commenting on the recent visit of the CIA Director to Moscow, Putin noted that contacts between US and Russian intelligence services have always existed and were never interrupted even during the toughest periods of the Cold War.

Barr: Interest Rates Should Be Raised If Inflation Fails to Recede Quickly

Federal Reserve Governor Michael Barr stated in a speech on Tuesday that the Federal Reserve will need to raise interest rates if inflation fails to recede quickly. He noted that inflation remains too high and has persisted for over five years. "If inflation does not appear to be easing sufficiently, then I believe we should act decisively and raise interest rates," Barr said. He added that if data trends provide confidence that inflation is slowing along a path toward the 2% target, the Fed could take more time to assess its policy stance.

The US economy maintains a solid performance, driven by investments in artificial intelligence technology, with a stable labor market and a relatively low unemployment rate. Many Fed officials have expressed a willingness to raise rates further, citing inflation metrics that persistently exceed the 2% target.

US August ISM Manufacturing Index Misses Expectations; US July Job Openings Rebound Slightly

The Institute for Supply Management (ISM) reported that the US Manufacturing Index stood at 54.6 in August, below market expectations of 55.2 and down from the previous reading of 55.6. During the period, the Prices Index sub-item registered at 71.1 (versus the 70.5 expected), New Orders stood at 53.7, and Employment posted at 51.2.

Separately, the US Department of Labor's Job Openings and Labor Turnover Survey (JOLTS) showed that July job openings reached 7.271 million, compared with market expectations of 7.313 million and a revised previous figure of 7.359 million. Labor demand has remained generally stable in recent months. The US labor market continues to exhibit the low-hiring, low-layoff pattern seen through most of the past few years. Amid geopolitical uncertainty and persistent inflation, employers may remain cautious about expanding workforce headcount while simultaneously showing reluctance to initiate layoffs.

【Key Focus Today】

10:00 Reserve Bank of New Zealand Rate Decision

20:15 US August ADP Employment Change

21:45 Bank of Canada Rate Decision

22:00 US July Factory Orders (MoM)

22:30 Bank of Canada Governor Tiff Macklem Holds Monetary Policy Press Conference

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