Geopolitical risk spreads to energy infrastructure as the Fed's rate-hike option stays on the table

Analysis index

Spot gold hesitates near 4,400: can an approaching “golden cross” dispel traders’ doubts?
U.S. fiscal risk is being transferred to markets as the long-end yield storm reaches the Fed
MUFG: The dollar index may find support at...
UBS: Core CPI cannot truly strip out energy prices, and the U.S.-Iran war’s pass-through is much larger than it appears
Asian iron ore: Improved sentiment and tighter supply support a rebound as lump premiums remain firm
Danske Bank week ahead: Preliminary August PMIs arrive, and the ECB still has room to raise rates
TD Securities: Gold CTA buying should last at least through next weekend; silver above... could trigger another round
Floating and onshore inventories fall together, thinning the global crude-oil “buffer”
July’s “scary data” fall more than expected: Can the Fed still sit still?
Asian methanol: Hormuz blockade deepens supply concerns and sends spot prices sharply higher across Asia
Asian paraxylene: Spot PX rises with upstream markets, but could disagreement over later months compress the premium?
Bank of America: A $1.4 trillion interest bill is changing the Treasury supply-demand equation
The “padding” in UK GDP may cap sterling’s rise, while intervention is only the yen’s first line of defence
Spot gold should keep advancing, but Treasury yields will put up roadblocks
Bank of America: July retail sales may disappoint, placing more obstacles in the way of the Fed hawks’ rate-rise vision
The “scary data” may unleash long-suppressed market emotion, but no single release can dictate direction any longer
The “scary data” arrive tonight, and currency markets may not have a quiet night
Standard Chartered: The Fed is done raising rates this year; markets may react with a lag and the dollar faces mild downward pressure
Asian palm oil fundamentals: Peak festive demand is fully anticipated, so why is the spot market still stuck?
Asian rebar fundamentals: A mine accident lifts raw-material expectations and spot and futures prices as cost concerns intensify
Strait traffic is far below its monthly average, and tension in the crude market may already be reaching a critical point
Asian propylene fundamentals: East China spot prices soften after the typhoon, but can low PDH runs and Korean cuts stop the offshore decline?
Spot silver reaches the bulls' “line in the sand”: how far could a break extend the decline?
Global crude throughput remains far below its historical norm, leaving medium-term oil prices under bearish pressure
Asian soybean fundamentals: Near-term Brazilian cargo trades as U.S. rain prospects and rising Chinese meal stocks shape the outlook
McKinsey: America's “Magnificent Seven” are drawing in global capital as the need to rebalance reaches a critical point
Spot gold has risen nearly 200% in six years, but the gold-to-stock ratio says it is still “cheap”
TD Securities: The Fed has paused RMP purchases, but is quantitative tightening about to restart?
U.S.-session points: Uncertainty over the Fed's reaction function is increasing pressure on the long end of the curve
JPMorgan: A Red Sea route restart is being mistaken for broad normalization, though fully safe passage before 2027 is unlikely
U.S.-session points: The Fed will remain patient unless price pressures broaden enough to require a forceful response
The Bank of Japan's rate-rise signals have done little to strengthen the yen because its weakness is rooted in the rate structure
Has gold's recent rise been driven mainly by shorts? Beware the risk of a continued modest pullback
Expectations of aggressive Fed increases could easily return; what should markets look like next week?
Markets have opened the champagne for falling inflation without asking whether weaker growth caused it
Jefferies: AI may keep lifting U.S. equities, with earnings growth potentially reaching...
Japanese retail traders end the intervention trade and return to shorting the yen
The next risk to global markets is quietly approaching, and AI may be a central force
VIP trading alert: The strait impasse continues to support oil, while the BOJ may accelerate tightening
Analysts warn that the mechanism for recovering from the next U.S. recession may fail, making the recovery longer than before
In a fragmented world, geopolitics is no longer a short-term risk but a lasting premium beneath oil prices
Global oil tightness is showing up in crack spreads, not crude prices; the next variable to watch is...
The market is debating one central question: how much geopolitical premium is still in oil? Three points to watch today
Spot gold intraday analysis: A second day of declines as Treasury yields reach their highest since 2001
U.S.-Japan intervention sacrifices the euro, while the BOJ may raise rates further to reinforce policy: three FX points today
Hawkish pricing eases further, but will the rate-rise option be taken off the table? Three gold-and-silver points today
Actual Hormuz flows may exceed market estimates, giving Trump more time to pressure Iran economically
Valuations reset and sentiment cools as Franklin Templeton turns optimistic on August equities
Attack on a Saudi refinery reminds investors that geopolitical risk has spread from Hormuz to Saudi energy infrastructure
Inflation has not frightened the market; expectations of lower real yields are the main force behind silver's rise
Scotiabank: Earlier market expectations were too aggressive, and Warsh should not rely too heavily on pricing to guide policy
One more August CPI report will arrive before the September decision, and the Fed's rate-rise option is not truly off the table
Argentina crop-region weather forecast for Aug. 14: Dry Pampas and frost risk test wheat growth

Spot gold hesitates near 4,400: can an approaching “golden cross” dispel traders’ doubts?

After the U.S. session began on Friday, spot gold traded unevenly. The price first moved lower, then reversed upward. Although it improved slightly from the morning session, the market still looked hesitant overall. The latest drop may have been ordinary profit-taking or a technical correction, but the real problem, in my view, is that the market simply cannot see a clear direction. The Middle East remains a tangle, and as long as the headlines keep creating confusion, capital will inevitably keep wavering.

U.S. Treasury yields rose during the day. In truth, however, this market follows yields while also watching the news. The movement in yields itself is now being shaped to a large degree by the Middle East and concerns about energy inflation. Those variables are intertwined, making the judgment harder.

On price action, the familiar issue remains: the 200-day exponential moving average, or EMA, is still the market’s focus. Whenever the price retreats toward that area, “value hunters” tend to step in, as they did during the Asian session today. The encouraging sign is that the 50-day EMA is gradually rising and is beginning to suggest a “golden cross,” a signal technical traders should follow closely.

Overall, the market remains somewhat lost. After the previous sharp rally, digesting part of the gain is a normal rhythm. It is also entirely understandable that traders do not want to carry large positions over the weekend.

(The above analysis is based on analyst Christopher Lewis’s research analysis of Aug. 14. It is for reference only and does not constitute investment advice.)

U.S. fiscal risk is being transferred to markets as the long-end yield storm reaches the Fed

The 10-year U.S. Treasury yield is now near 4.66%, while the 30-year yield has risen above 5.23%, steepening the yield curve. I have noticed that the market’s interpretation of this shape is changing. Traditionally, a rising curve has often been treated as a recession warning. In the present setting, however, I think it reflects investors reassessing the United States’ long-term debt outlook and refinancing costs. Put differently, the market is shifting its attention from “what will the Fed do at its next meeting?” to the more fundamental question of whether the fiscal path is sustainable.

This repricing has effects across markets: growth-stock valuations come under pressure, financing costs rise for housing and infrastructure projects, and both real rates and the dollar receive support. What concerns me most is a possible feedback loop. If long-end yields keep rising, the Federal Reserve’s room to ease will narrow further, and volatility across asset classes could then rise systematically. In short, the market is paying for fiscal risk, and the bill may be larger than expected.

(The above analysis reflects views published by market analyst JayBee on Aug. 14. It is for reference only and does not constitute investment advice.)

MUFG: The dollar index may find support at...

After July retail-sales growth came in below expectations, the dollar index briefly set a weekly low near 99.50. It was also weak over the week as a whole, mainly because markets reduced expectations of Federal Reserve rate increases. Slower private-sector employment and wage growth in recent months, together with limited evidence that higher energy prices since the U.S.-Iran conflict have passed through to core inflation, give the Fed more room to leave rates unchanged. Fed officials may therefore attach less importance to July’s unexpected rise in core PCE. Falling short-term Treasury yields have weighed on the dollar throughout this month, but have not yet been enough to trigger another decline after the sell-off at the end of last month. The dollar index may still find support near its 200-day moving average.

(The above analysis comes from MUFG’s Aug. 14 report. It is for reference only and does not constitute investment advice.)

UBS: Core CPI cannot truly strip out energy prices, and the U.S.-Iran war’s pass-through is much larger than it appears

In terms of the outcome, the U.S.-Iran war has indeed driven global oil prices sharply higher and raised consumer-price inflation around the world. The question is how large that pass-through really is.

“Energy,” including non-oil energy, accounts for slightly more than 7% of the U.S. consumer-price basket and nearly 11% in the European Union. Those shares do not tell the whole story. So-called core inflation, which excludes food and energy, does not actually remove the effects of energy.

Those effects remain embedded in airfares, transport and logistics, and the delivery cost of all kinds of goods.

Measuring exposure by a country’s own oil consumption is also inadequate. If a product is manufactured in China and sold in Europe, for example, the oil cost borne by Europe includes the oil consumed during production and transport in China, far beyond the amount consumed within Europe itself.

Looking only at crude-oil futures also completely misses the surge in refined-product prices. Refining capacity in the Gulf has been damaged. Since February, crude futures have risen 26%, but U.S. diesel prices are up nearly 50%. By contrast, vehicle-energy prices in China have risen only 5%. That implies the oil cost embedded in goods imported by the United States from China may be lower than the embedded cost of producing the same goods in the United States.

It is therefore extremely difficult to isolate the “war-related price effect” in inflation data. One point is clear, however: for the major economies, the war is the most important reason inflation remains above target.

(The above analysis comes from UBS’s Aug. 14 report. It is for reference only and does not constitute investment advice.)

Asian iron ore: Improved sentiment and tighter supply support a rebound as lump premiums remain firm

Market participants said seaborne iron-ore prices rose on Aug. 14 as sentiment improved. Platts assessed the IODEX at $95.80 per dry metric ton, up $0.45 per dry metric ton from Aug. 13. A coal-mine accident in Hunan strengthened the physical steel market and further lifted confidence in raw materials. Chinese portside iron-ore prices rose as well. Platts assessed the IOPIX at North China ports at 709 yuan per wet metric ton, up 4 yuan per wet metric ton from the previous day. A North China trader said the rise in steel had produced a sentiment-driven recovery in iron ore, although interest in high-grade raw material remained limited. Another trader said medium- and low-grade fines were more popular than high-grade fines because they were more cost-effective, putting some pressure on high-grade premiums. For domestic concentrates, prices in Tangshan edged higher from the previous period. Platts assessed 66%-grade domestic concentrate at 968 yuan per metric ton. Although overall market sentiment was not especially strong, tight domestic supply provided a floor for prices. Market analysis held that port inventories of lump ore remained low, even below the level a year earlier. Together with high pellet and concentrate prices, that left lump-ore fundamentals firm and supported elevated premiums.

(The above analysis is based on the latest views from S&P Global Commodity Insights’ Platts and is for reference only. It does not constitute investment advice.)

Danske Bank week ahead: Preliminary August PMIs arrive, and the ECB still has room to raise rates

The U.S. July employment report showed an unexpected decline in nonfarm payrolls, a downward revision to the previous figure and a fall rather than a rise in unemployment, indicating that insufficient labor supply is constraining the economy’s potential. Hourly earnings rose only 0.1%. Low unemployment did not produce wage inflation, while the implied risk to consumption also appeared in the July retail-sales report: the “scary data” posted its largest decline in more than a year. July inflation was broadly in line with expectations, but the annual rate remained high. The data did not send an emergency signal, and PPI was below expectations. The probability of a September increase fell, although December remains possible. August CPI and employment data are still due before the September meeting and could completely change the current assessment.

Oil prices rose this week and refined-product spreads remained high. News about the Strait of Hormuz was bearish, but there was no sign that higher energy prices had developed into broad inflation.

The main focus next week is the preliminary August PMI data for the major economies, due Friday. The euro area’s composite PMI strengthened to 52.0 in July, showing acceptable growth and suggesting that there is still room to raise rates. The PMI also showed diminishing upward price pressure, however, so there is little urgency to tighten. The euro area will also publish second-quarter wage-growth data for the first time on Friday, an important piece of the inflation-and-rates puzzle.

In Japan, the joint intervention has raised market attention. This week’s growth and inflation data may offer clues about the Bank of Japan’s rate-increase outlook. If the BOJ can in fact raise rates in the future, that may provide some support for the yen.

(The above analysis comes from Danske Bank’s Aug. 14 report. It is for reference only and does not constitute investment advice.)

TD Securities: Gold CTA buying should last at least through next weekend; silver above... could trigger another round

CTA net-long positioning in gold is gradually becoming more secure, while renewed interest from discretionary buyers is giving the market firmer support. Although energy prices are rising, weaker economic data are increasing the likelihood that the Federal Reserve will leave rates unchanged, which should help gold trade in a higher range. CTA triggers on both sides of the current price are far away, so only small position changes are likely in the short term. That also reflects stronger buying support from systematic strategies. In silver, CTA flows remain particularly strong within precious metals. A move above $66.80 an ounce could trigger another wave of buying. Pricing simulations suggest that under any scenario CTAs will continue adding through next weekend, with net longs potentially rising by another 2% to 5% of the historical maximum position.

(The above analysis comes from TD Securities’ Aug. 14 report. It is for reference only and does not constitute investment advice.)

Floating and onshore inventories fall together, thinning the global crude-oil “buffer”

According to a chart of global visible crude inventories compiled from Goldman Sachs Global Investment Research, the International Energy Agency, Kpler, the U.S. Department of Energy and other sources, total visible inventories had fallen to about 7.72 billion barrels as of Aug. 13, 2026, a year-on-year change of -0.7 million barrels per day. Since March 1, the cumulative decline has reached 496 million barrels, an average reduction of about 3.0 million barrels per day.

The inventory curve shows a marked and sustained retreat after the rapid accumulation from mid-2025 into early 2026, following the introduction of the U.S. blockade. The current level is close to the low at the beginning of 2025. This pattern suggests that actual inventory depletion has corrected the market’s earlier “super glut” narrative. Global crude supply and demand are shifting from a loose balance toward equilibrium or even tightness. With floating and onshore inventories falling at the same time, short-term supply elasticity is already quite limited.

(The above analysis comes from analyst Michael Raymond’s Aug. 14 report. It is for reference only and does not constitute investment advice.)

July’s “scary data” fall more than expected: Can the Fed still sit still?

U.S. retail sales fell 0.6% in July from the previous month, far below market expectations. Online retail and motor-vehicle sales were the main drags. The annual rate nevertheless remained at 5%, showing that consumption had not stalled overall. Even so, the negative monthly reading and weakness in the control group, which excludes volatile categories such as autos and building materials, point to the same signal: consumer momentum is weakening.

For us, the report corroborates the recent softer inflation releases and gives the Federal Reserve more evidence that it can wait patiently. Front-end rate expectations may therefore remain under pressure, while market pricing of further rate increases may be restrained. In short, a cooling trend in consumption is taking shape, but it is far from a reason to panic. The Fed now has more reason to stay on hold and wait for future releases to confirm the direction.

(The above analysis comes from Cetera Investment Management’s Aug. 14 report. It is for reference only and does not constitute investment advice.)

Asian methanol: Hormuz blockade deepens supply concerns and sends spot prices sharply higher across Asia

On Aug. 14, maintenance at Southeast Asian plants and continued obstruction of Middle Eastern cargoes by the Strait of Hormuz blockade pushed Asian methanol prices significantly higher. Platts assessed Southeast Asian CFR methanol at $476 per metric ton on Aug. 14, up $16 per metric ton from the previous trading day. Offers for FOB China cargoes in East China were quoted at $380-$400 per metric ton, equivalent to about $420-$440 per metric ton after freight. No trade was heard because buyers and sellers remained far apart. In China, domestic methanol prices rose in afternoon trading as crude strengthened. East China spot ex-tank cargoes traded at 2,670-2,700 yuan per metric ton, about 10 yuan per metric ton above the previous trading day. The dollar-denominated CFR China market was stable, with no firm bids or offers heard. Platts assessed CFR China methanol at $325.50 per metric ton on Aug. 14, up $1.50 per metric ton from the previous trading day.

(The above analysis is based on the latest views from S&P Global Commodity Insights’ Platts.)

Asian paraxylene: Spot PX rises with upstream markets, but could disagreement over later months compress the premium?

On Aug. 14, Asian paraxylene, or PX, spot prices moved unevenly higher as crude oil and naphtha strengthened upstream. Platts assessed the Asian PX CFR China and FOB Korea benchmarks $10.17 per metric ton higher than the previous trading day at $1,093.67 per metric ton and $1,072.67 per metric ton, respectively. Upstream costs were also stronger: the prompt Brent crude futures contract rose 30 cents per barrel from the previous session to $88.08 per barrel, while Japan naphtha rose $13.75 per metric ton to $780.875 per metric ton. Although market participants generally expected the PX market to remain tight in the short term, some held a mildly bearish view of the outlook. One Chinese participant said October availability seemed to be increasing and traders still had cargoes to sell. The participant expected the PX floating-price premium to decline if Chinese PX plants ended maintenance and resumed production as scheduled while feedstock supply remained adequate. Another trader was also bearish on PX, expecting greater September arrivals to weaken the Asian naphtha market. The trader added, however, that weak naphtha would exert only limited downward pressure on PX and that the PX-naphtha spread should remain supported.

(The above analysis is based on the latest views from S&P Global Commodity Insights’ Platts.)

Bank of America: A $1.4 trillion interest bill is changing the Treasury supply-demand equation

U.S. national debt is rising rapidly along a trend established over nearly 100 days. It is expected to exceed $40 trillion within days and could reach $50 trillion in 2029. Interest expense over the past 12 months has already reached $1.4 trillion, and that cost will continue to rise until the global five-year government-bond yield falls to 3.25%. This further reinforces the allocation case for “avoiding bonds.”

At the same time, the stop-out yield at the 30-year Treasury auction held early on Aug. 14 reached 5.126%, a 25-year high, while the S&P 500 set another record on the same day. The coexistence of high yields and record equities reflects the market’s tolerance of fiscal expansion and a temporary divergence in risk assets’ sensitivity to rates. The simultaneous rise in the debt trajectory and long-end rates may continue to shape Treasury supply and demand, and the relative performance of stocks and bonds, over the coming weeks.

(The above analysis comes from Bank of America’s Aug. 14 report. It is for reference only and does not constitute investment advice.)

The “padding” in UK GDP may cap sterling’s rise, while intervention is only the yen’s first line of defence

The dollar’s response to inflation data has diverged. It strengthened when CPI slowed, but came under pressure after annual PPI fell from 5.5% to 4.7%. Meanwhile, the market-implied probability of a Federal Reserve rate increase in September has fallen to 32%, with October at 47%. Forward pricing shows rates remaining unchanged through December. This series of adjustments is weighing on the dollar index.

Initial claims for unemployment benefits also edged up to 209,000 in Thursday’s weekly release, hurting the dollar because the figures heightened concern that the labor market is cooling.

Other currencies advanced as the dollar weakened. UK GDP grew 0.4% in the second quarter from the previous quarter, an annualized 1.6%, faster than the United States. Bank of England Chief Economist Huw Pill said that should prompt the central bank to raise its repo rate. Part of the United Kingdom’s recent growth, however, came from the World Cup, hot weather that lifted services and the brief easing of Middle East tensions in June. Looking ahead, GDP faces a risk of retreat, potentially putting medium-term pressure on sterling against the dollar.

Dollar-yen has retreated from near 160 but remains close to that threshold and still faces upside risk. A break above it could trigger another round of joint U.S.-Japan intervention. BlackRock believes currency intervention is only the yen’s first line of defence. To consolidate the currency’s gains, the Bank of Japan must tighten faster and send a more hawkish signal.

Bloomberg, citing people familiar with the matter, reported that the Bank of Japan’s board was considering a rate increase in September or October. The market response was muted because investors had already expected action in the autumn: the probability of an increase by October was about 60%.

Even so, the U.S.-Japan rate gap remains wide and continues to provide fertile ground for carry trades. Traders used the joint intervention to sell the yen again at higher levels, allowing dollar-yen bulls to recover most of the ground lost during the official action.

(The above analysis comes from FxPro analyst Alexander Kuptsikevich’s Aug. 14 analysis. It is for reference only and does not constitute investment advice.)

Spot gold should keep advancing, but Treasury yields will put up roadblocks

My reading of the current macro environment is that spot gold sits in a struggle between bullish and bearish forces, but with an upward bias. Support comes first from geopolitics: tensions involving Iran continue to rise, fears of supply disruption are pushing oil higher, and gold’s safe-haven demand has strengthened. It also comes from the dollar and rate expectations. A weaker dollar index and cooling expectations of Federal Reserve rate increases both directly support the gold price.

I am also very aware that Treasury yields remain high, the main factor constraining gold’s upside. Geopolitics and the rate environment are pushing one way, while yields pull back the other. That tug of war means gold is unlikely to rise smoothly in the short term.

On balance, I retain a bullish view of gold, but it is conditional: yields must be watched closely. If rate pressure increases further, it may offset the benefits from geopolitics and the dollar, and I would adjust my view accordingly. For now, the direction is upward, but the path will not be smooth.

(The above analysis comes from market analyst Alia’s Aug. 14 report. It is for reference only and does not constitute investment advice.)

Bank of America: July retail sales may disappoint, placing more obstacles in the way of the Fed hawks’ rate-rise vision

Our tracking of real-time card-spending data suggests that July retail sales may be substantially weaker than the market’s general expectation. Specifically, we forecast a 0.4% month-on-month decline in headline retail sales, against consensus growth of 0.1%. We expect the control group, which excludes volatile categories such as autos and building materials, to fall 0.6%, against consensus growth of 0.3%. There are three main drags: Prime Day moved forward to June this year, bringing some spending forward; July’s high temperatures discouraged people from going out to spend; and spending related to the World Cup cooled after the tournament ended.

If the actual figures released tonight confirm our judgment, market concern about slowing U.S. consumption will deepen and expectations of another Federal Reserve rate increase this year will weaken further. The dollar and short-term interest-rate futures would then come under pressure. The immediate reaction in short-end rates after the release will therefore be the key window through which we observe how the market reprices the policy path.

(The above analysis comes from Bank of America’s Aug. 14 report. It is for reference only and does not constitute investment advice.)

The “scary data” may unleash long-suppressed market emotion, but no single release can dictate direction any longer

Consumer data will be the market’s next major test, with Friday’s U.S. retail-sales report receiving particular attention. The labor market is showing weakness and inflation has eased. The central question is whether household demand can remain resilient enough to keep the slowdown from deepening. If consumption holds firm while inflation continues to fall, the market may gradually price the ideal combination of “moderate growth + falling inflation + no need for another increase.” If consumption deteriorates sharply, however, falling inflation is more likely to reflect collapsing demand. For stocks, the focus would then move from rate-driven valuations to earnings expectations. For bonds, growth concerns would compete with inflation and fiscal risk for dominance. In foreign exchange, the reaction would be far more complicated than “weak U.S. data means a weak dollar.”

The bond market has not declared victory because of recent softer inflation data. Even as near-term expectations of rate increases have declined, the 10-year Treasury yield remains near 4.7%, showing that the market is still pricing inflation uncertainty, fiscal pressure, geopolitical risk and enormous borrowing needs rather than believing inflation has been defeated and monetary conditions will ease substantially. That creates a rare combination for equity investors: record stock prices alongside persistently high long-term financing costs. The divergence warrants caution.

The foreign-exchange market also shows how complicated the environment has become. Dollar-yen is near 160 even after intervention and despite expectations that the Bank of Japan may raise rates again. The pair has become a meeting point for Treasury yields, Japanese monetary policy, carry trades and intervention risk. The lesson for currency traders is clear: softer U.S. inflation does not necessarily mean a weaker dollar. Rate differentials, geopolitical demand for dollars and relative economic performance matter as well.

The market increasingly depends on cross-checking, and no single figure is sufficient to drive a conclusion. Several signals should be monitored together: U.S. consumer spending, to determine whether weaker employment is beginning to restrain demand; whether the 10-year Treasury yield forms a sustained downward trend rather than merely reacting briefly to a single report; the dollar’s overall direction, to see whether cooling rate-rise expectations lead to broad depreciation; critical changes in dollar-yen as monetary-policy divergence meets intervention risk; oil prices, because a geopolitically driven rebound could reignite inflation expectations at any time; and corporate earnings, to judge whether the macro slowdown is beginning to erode profits. The interaction of these variables provides more information than any headline. Overall, the market is in a struggle among several forces, making careful verification preferable to linear inference.

(The above analysis comes from analyst Nikolaos Akkizidis’s Aug. 14 report. It is for reference only and does not constitute investment advice.)

The “scary data” arrive tonight, and currency markets may not have a quiet night

U.S. July retail-sales data will be released at 20:30 Beijing time tonight. According to our volatility-warning model, moves in the major currency pairs are expected to increase significantly during the event.

The release matters because it directly maps the resilience of U.S. consumer spending and will heavily influence market pricing of the Federal Reserve’s next policy step. Traders need to watch the gap between the actual reading and market expectations. Any upside or downside surprise could provoke a sharp reaction in the corresponding currency pairs.

(The above analysis comes from Autochartist’s Aug. 14 report. It is for reference only and does not constitute investment advice.)

Standard Chartered: The Fed is done raising rates this year; markets may react with a lag and the dollar faces mild downward pressure

In our view, the Federal Reserve should keep rates at the current 3.50%-3.75% range for the rest of 2026. Two strands of evidence support that judgment: core inflation has fallen to 2.5%, moving gradually toward the 2% target, while nonfarm payrolls declined by 23,000 in July and the previous figure was revised down, revealing weakness in the labor market. Market pricing of a September increase is now below 40%, broadly consistent with our assessment.

Oil remains the largest upside risk. If geopolitical developments push energy costs higher again, the disinflation path could be interrupted. Given the current data combination, however, weaker employment and cooler inflation have reduced the need for further tightening. We also recognize that the distance to an explicit shift toward easier policy remains considerable. Our baseline is therefore that the upside in Treasury yields will be limited and the dollar may face mild downward pressure, provided the data do not unexpectedly reverse.

(The above analysis comes from Standard Chartered’s Aug. 14 report. It is for reference only and does not constitute investment advice.)

Asian palm oil fundamentals: Peak festive demand is fully anticipated, so why is the spot market still stuck?

On Aug. 14, Asian palm oil markets were volatile and mixed. Although crude oil and other vegetable-oil futures generally rose, palm oil futures on Bursa Malaysia Derivatives, or BMD, weakened late in the day after an early advance and closed nearly flat with a slight loss. Indian spot trading remained slow, with no new deals heard during the day. Data released by the Solvent Extractors' Association of India, or SEA, on Aug. 13 showed that India, the world's largest vegetable-oil buyer, was actively restocking ahead of the coming festive-consumption season. Total edible-oil imports rose to 1525000 metric tons in July, a 10-month high and an increase of 32.7% from the previous month. July palm oil imports surged 49% month on month to 730965 metric tons, the highest in nearly five months. Soybean oil still carries a premium of about $40-$50 per metric ton over palm oil, preserving a preference for palm oil purchases. A Singapore trader said the early futures-market rise prompted sellers to raise spot offers, but buyers would not readily chase prices until they returned to psychologically acceptable levels. Indonesian spot trading was similarly quiet. In China, one September-loading cargo of about 7000 metric tons of refined palm olein was heard traded at $1180 per metric ton, CIF China. Traders said domestic palm olein inventories were healthy and relatively high, while substantive end-user demand was still starting only slowly.

(The above analysis is based on the latest views from S&P Global Commodity Insights' Platts. It is for reference only and does not constitute investment advice.)

Asian rebar fundamentals: A mine accident lifts raw-material expectations and spot and futures prices as cost concerns intensify

Asian billet and rebar markets rose modestly overall on Aug. 14. Expectations that a coal-mine safety accident would raise raw-material costs supported a broad rebound in Chinese domestic spot prices, while export markets were constrained by generally subdued demand and remained largely stable. Market reports said a gas-outburst accident at a coal mine in Hunan prompted expectations of tighter coal supply and higher input costs, in turn lifting finished-steel spot prices. Tradable ex-works Tangshan Q235 billet was quoted at 3010-3020 yuan per metric ton, up 10 yuan per metric ton from the previous day. Beijing spot HRB400 18-25mm rebar likewise rose 10 yuan per metric ton to 3000 yuan per metric ton. Chinese 3SP 150mm billet export offers remained within $450-$457 per metric ton, FOB China, while overseas buyers indicated bids at $443 per metric ton, FOB. A Hangzhou trader said mills were unwilling to raise offers further that day because they were competing for orders, and most held previous levels. An East China trader said current export offers still faced obstacles to actual transactions. In Manila, offers for 5SP 150mm billet stood at $475-$478 per metric ton, CFR, with the most competitive offer up $2 per metric ton from the previous day. For export rebar, indications for Chinese-origin material to Singapore edged up to $497-$498 per metric ton, CFR. An East China trader said the domestic spot increase might prompt exporters to lift offers further.

(The above analysis is based on the latest views from S&P Global Commodity Insights' Platts. It is for reference only and does not constitute investment advice.)

Strait traffic is far below its monthly average, and tension in the crude market may already be reaching a critical point

Reuters, citing Kpler data, reported that tanker traffic through the Strait of Hormuz fell further this week, with only 5 vessels recorded on Wednesday and 9 on Thursday, both below the monthly average of 12. The data showed that 5 tankers entered the waterway yesterday and 4 exited, with most traveling through the Iranian corridor. At the Bab el-Mandeb Strait in the Red Sea, traffic was in double digits: Kpler reported that 19 commodity carriers passed through the waterway on Thursday. Reuters noted that the count covered only vessels whose transponders were switched on.

At the same time, the United States is increasing pressure, threatening to extend the maritime blockade of Iran indefinitely and impose further sanctions to tighten the squeeze on Iran's economy. Reuters quoted Defense Secretary Hegseth as saying: “The U.S. Navy can maintain a blockade like this indefinitely. Ships will rotate in and out as they do now, and we will continue doing it.” Treasury Secretary Bessent foreshadowed more action: “Watch for more announcements next week. We will impose measures to economically isolate a country unlike anything ever seen in history.”

Those statements show that the conflict is far from over, yet oil prices have barely reacted. Traders have focused instead on the more than 17.4-million-barrel rise in U.S. commercial crude inventories last week. Global inventories, however, continue to be drawn down, including the strategic reserves that were previously released on a large scale. Asian markets, whose imports fell to decade lows in May and June and helped restrain prices, are now returning to buy more. If the impasse in U.S.-Iran talks and over control of the Strait of Hormuz lasts several more weeks, the physical oil market may approach the much-feared critical point. Once the market perceives an actual supply shortage, prices could spike sharply.

(The above analysis comes from analyst Irina Slav's Aug. 14 report. It is for reference only and does not constitute investment advice.)

Asian propylene fundamentals: East China spot prices soften after the typhoon, but can low PDH runs and Korean cuts stop the offshore decline?

Chinese propylene spot prices softened slightly on Aug. 14 as vessel arrivals gradually returned to normal after Typhoon “White Dolphin” passed. Platts assessed CFR China propylene down $10 per metric ton from the previous trading day at $1070 per metric ton, while East China spot propylene fell 50 yuan per metric ton to 8600 yuan per metric ton. Traders said cargoes delayed by the typhoon's landfall early in the week were arriving in succession, easing near-term supply pressure in East China. Shandong spot propylene was unchanged from the previous day at 8550 yuan per metric ton, supported by continuing maintenance at several domestic plants. Market sources said the average operating rate of China's propane-dehydrogenation, or PDH, plants was currently 68%-70%. September supply in South Korea was expected to be tight, and several producers had turned to the spot market as buyers because of feedstock issues. Market indications placed formula-based seller offers around parity to a $5-per-metric-ton premium, while bids were at discounts of more than $10 per metric ton. Southeast Asian supply was also tight because several plants had experienced unplanned outages. Buyer sentiment remained weak, however, with most adopting a wait-and-see stance, and the CFR Southeast Asia benchmark was unchanged on the week at $1100 per metric ton. Among Korean refinery units, Hyundai Oilbank's residual fluid catalytic cracker, or RFCC, operated at 100% capacity in August, unchanged from July. Hyundai Chemical lowered the August operating rate of its naphtha steam cracker to 70% from 80% in July.

(The above analysis is based on the latest views from S&P Global Commodity Insights' Platts. It is for reference only and does not constitute investment advice.)

Spot silver reaches the bulls' “line in the sand”: how far could a break extend the decline?

Recent employment and inflation data have been soft. Nonfarm payrolls missed expectations, while both CPI and PPI showed no acceleration in inflation. That lifted the market-implied probability that the Federal Reserve would leave rates unchanged in September from roughly even odds to about 65%. The repricing initially supported spot silver, but profit-taking then emerged and the price failed to extend its rise.

The central problem is the dollar. Although weaker data lowered Treasury yields, the dollar remained firm near recent highs. The divergence between bonds and foreign exchange—the combination of lower yields and a stronger dollar—put a ceiling on silver, because dollar strength raises the cost for non-U.S. buyers. Silver is currently receiving support only from the rate side; it needs both sides to work together for a smooth advance.

The dollar's resilience partly reflects geopolitics. The Strait of Hormuz remains restricted, and uncertainty continues to attract dollar buying even as rate expectations move lower. Silver is trading the rate outlook, while the dollar is trading the conflict itself: two sides of the same story, with the dollar winning this week.

Divisions inside the Fed have not disappeared. The inflation reports weakened the case for a September increase, but oil remains far above its pre-conflict level. Some officials worry that oil will lift inflation again, while others favor waiting. Crude fell this week after OPEC and the IEA lowered their demand projections, temporarily easing the pressure. If crude resumes its rise, however, the benign inflation narrative built on weaker data will be reassessed. Silver is not trading the war itself, but the war's effect on fuel costs and the transmission of those costs into Fed decisions.

Entering the week's final trading day, silver had a more favorable rate environment than it did a week earlier, with a 65% probability of no September move. Yet the price quickly retreated after touching $66.80 and failed to hold above $66, as the strong dollar prevented the rate benefit from turning into a sustained rise.

Even so, price action suggests that silver's path of least resistance remains upward. During today's Asian session, the price touched the area around last week's $63.48 close and rebounded quickly, showing defensive buying at that level. If it can establish itself above this week's high, the uptrend could resume, with resistance near the 200-day moving average. If $63.48 is conclusively lost and the price then falls below the 50-day moving average, the rate benefit would still be insufficient to overcome the dollar headwind. Overall, silver is at the point where improved rates meet dollar strength; geopolitics and oil will determine how the contest breaks.

(The above analysis comes from analyst James Hyerczyk's Aug. 12, 2026 research. It is for reference only and does not constitute investment advice.)

Global crude throughput remains far below its historical norm, leaving medium-term oil prices under bearish pressure

In tracking global refinery operations, one striking number caught my attention. Total throughput is holding near 80 million barrels per day, about 5 million barrels per day below the normal midsummer level. The shortfall is not evenly distributed but highly concentrated: Russia and regions east of Suez are the principal areas of lost momentum. The Atlantic Basin is relatively stable, in sharp contrast with the cliff-like decline to the east.

That means two things are happening at once. Prompt demand for crude is being significantly suppressed, especially in Middle Eastern and Asian delivered purchases, while refined-product supply—particularly diesel—is tightening at the same time. In my framework, this is neither a purely bearish nor a purely bullish signal, but a structural mismatch. In the short term, low throughput weighs on crude demand. Yet refined-product tightness supports crack spreads, and once refining margins become attractive enough, they may encourage refineries to increase runs later.

My conclusion is therefore that the current data impose neutral-to-bearish demand pressure on WTI and Brent, but the pressure is not one-way. The market's eventual direction will depend on how far product tightness can offset weak crude demand and whether profit incentives prompt refineries to end this period of low runs early.

(The above analysis comes from analyst Jack Straw's Aug. 14 report. It is for reference only and does not constitute investment advice.)

Asian soybean fundamentals: Near-term Brazilian cargo trades as U.S. rain prospects and rising Chinese meal stocks shape the outlook

Asian soybean markets focused on Aug. 14 on a new trade for near-term Brazilian shipment, improving weather prospects in U.S. growing regions and the drag on sentiment from accumulating domestic soybean-meal inventories. Platts assessed September-delivery CFR China soybeans up $2.48 per metric ton from the previous day at $538.39 per metric ton. The basis was unchanged at a 275-cent-per-bushel premium to the CBOT November soybean contract, or X. On overnight offshore purchases, several soybean traders confirmed hearing that Brazilian-origin soybeans had traded at a 285-cent-per-bushel premium to the CBOT November contract. One trader said discounting for October shipment had largely been compressed and a trade would likely require a price close to offers at a 285-cent-per-bushel premium to the November CBOT contract. Domestic traders said forecasts for the next two weeks called for beneficial rainfall in major U.S. soybean-growing regions, substantially increasing the probability of higher yields and turning sentiment bearish again. In China's downstream market, soybean-meal inventories edged higher because end-user spot demand was weak. A local trader said domestic crushing rates were expected to remain high in the short term, which could cause stocks to accumulate further and increase pressure on mills to accelerate the collection and dispatch of contracted cargoes. Market participants still need to monitor crushing schedules and changes around the inventory turning point closely.

(The above analysis is based on the latest views from S&P Global Commodity Insights' Platts. It is for reference only and does not constitute investment advice.)

McKinsey: America's “Magnificent Seven” are drawing in global capital as the need to rebalance reaches a critical point

Our latest global balance-sheet research shows that U.S. corporate-equity market capitalization has risen to 3.7 times GDP, a record. Over the years we have tracked global capital flows, this figure has become more than a statistical extreme; it is a signal that deserves close attention. The United States alone accounts for nearly half of global corporate-equity liabilities, and since 2021 more than half of the growth in U.S. equity-market value has been driven by the seven companies known as the “Magnificent Seven.”

Over the longer historical window of the past 15 to 25 years, the U.S. share of global capital markets has continued to expand. Asia's share has risen at the same time, while other developed markets, including the euro area, have contracted in relative terms. Those structural changes point clearly to one conclusion: the global pull exerted by U.S. technology and capital markets is accelerating, and global investors' exposure to dollar assets has reached an extreme level.

For us, concentration itself is not the problem; the problem is the risk of reversal after concentration. If U.S. corporate-earnings growth slows or the global rate environment turns, this extreme positioning could become an important trigger for a change in risk appetite. From a cross-asset-allocation perspective, the premium and imbalance of U.S. equities relative to other global markets have entered a range that requires dynamic monitoring. This is not a forecast for U.S. stocks, but a practical warning about managing risk exposure: the need to rebalance may be more urgent than at any point in the past decade.

(The above analysis comes from McKinsey's Aug. 14 report. It is for reference only and does not constitute investment advice.)

Spot gold has risen nearly 200% in six years, but the gold-to-stock ratio says it is still “cheap”

I have been following the long-run ratio of gold to the Dow Jones Industrial Average, which is currently near 0.081 and, in my view, at a pivotal point in a historical rotation of capital. It is far below the peaks seen during earlier periods when gold substantially outperformed stocks. That means that even after gold's long run, it still cannot be called expensive relative to equities.

History shows clear cycles in gold's outperformance of stocks: 1930 to 1960, the late 1960s to the early 1980s, and the early 2000s to the early 2010s all featured multiyear periods of gold strength. The current rotation, which began in mid-2020, closely resembles the early stages of those historical cycles. One fundamental difference, however, is that central banks have become persistent net buyers for the first time, providing unprecedented structural support. Several long-term observers of the market therefore expect the present precious-metals bull market to have at least another 8 years to run.

From the perspective of ratio mean reversion, a move toward the historical level near 0.43 would leave gold with several times its current upside. That is not a forecast, of course, but it offers a way to measure relative value. Short-term volatility in spot gold does not change my long-term assessment. Fiscal pressure, geopolitical risk and central-bank demand are combining at the macro level; in allocation terms, gold remains attractive against equities. That is my central conclusion: gold's price is high, but its relative value is not.

(The above analysis comes from charlieadeamos's Aug. 14 report. It is for reference only and does not constitute investment advice.)

TD Securities: The Fed has paused RMP purchases, but is quantitative tightening about to restart?

In our view, the Federal Reserve's decision to taper reserve-management purchases from $40 billion a month to $10 billion and then pause reflects soft money-market rates and still-ample reserve buffers, not a signal that quantitative tightening is about to resume. The market may worry that this is a first step back toward tightening, but we think the pause is temporary. The Fed is likely to restart purchases in November 2026 at the lower pace of $5 billion-$10 billion a month to smooth money-market operations into year-end, while substantive balance-sheet changes may not arrive until 2027.

Why do we think the pause is temporary? First, reserves remain well above the Fed's estimated “lowest comfortable level,” leaving little upward pressure on money-market rates and making it possible to pause purchases without causing a liquidity squeeze. Second, as year-end approaches, seasonal factors and fiscal-financing needs may again push short-term rates higher, requiring the Fed to resume moderate buying to keep markets stable. We therefore view the pause as an intermission, not a permanent stop. In the meantime, a modest decline in reserve buffers may help money-market rates return to more normal levels and create the conditions for purchases to restart in November.

The Fed's implementation instructions still explicitly direct the New York Fed to “increase the securities holdings in the System Open Market Account through purchases of Treasury bills.” That is consistent with our view: we do not think this pause means quantitative tightening will soon return. In short, this is a technically motivated pause in intervention, not a change in policy direction.

(The above analysis comes from TD Securities' Aug. 14 report. It is for reference only and does not constitute investment advice.)

U.S.-session points: Uncertainty over the Fed's reaction function is increasing pressure on the long end of the curve

Japanese policymakers are gradually accepting the possibility of a near-term rate increase. As Japanese government-bond yields become more attractive, the market is beginning to discuss whether they may eventually trigger a reverse carry trade. Japan's 10-year yield has risen above 2.85%, about one percentage point higher than the level once thought capable of triggering such a reversal. If more attractive Japanese bond yields begin drawing capital home and reduce allocations to U.S. sovereign debt, that shift could occur at a sensitive moment when the Federal Reserve is under pressure to lower rates.

Weak U.S. employment and inflation data are reducing expectations of a September increase, weighing on front-end yields and the dollar. A broad bond sell-off previously triggered by hawkish signals has also partly reversed as economic data weakened, and together with strong corporate earnings this has lifted major U.S. and European equity indexes. The problem is that long-term financing costs are not entirely determined by the Fed. Geopolitical risk, cross-border capital flows and sovereign-debt trends all influence long-end yields. Adjusting the short-term policy rate alone is not enough to push the long end substantially lower.

At the same time, uncertainty about the policy reaction function is increasing pressure on the long end of the curve. The market cannot tell whether policy is focused on continuing to suppress inflation or on allowing a lower-rate environment to be absorbed smoothly to ease the U.S. debt-interest burden. Even as AI-related growth, government spending and efforts to narrow the trade deficit continue to contribute, the U.S. debt-to-GDP ratio has returned to its highest level since the pandemic and continues to affect future long-term financing costs. If economic data do not justify a rate cut, investors may not accept that yields should fall sharply in tandem even if the Fed ultimately does cut.

(The above comes from a Daily Market Observation article. It is for reference only and does not constitute investment advice.)

JPMorgan: A Red Sea route restart is being mistaken for broad normalization, though fully safe passage before 2027 is unlikely

We note that both Maersk and Hapag-Lloyd have raised their earnings guidance while port and inland bottlenecks persist. The market's central mistake is to underestimate how tight effective capacity actually is. Even as new ships enter service, congestion, trade imbalances and insufficient infrastructure investment continue jointly to constrain available capacity. In our view, the industry is entering a cycle in which freight rates remain firm for longer. As the trans-Pacific peak season approaches, carriers' pricing power, operating flexibility and cost discipline will become increasingly important.

On the Red Sea route, we judge that recent restorative adjustments by some carriers are tactical moves rather than the beginning of broad normalization. A return to passage with no risk at all is unlikely before 2027. The largest current bottleneck is port congestion: Shanghai, Singapore and major European hubs all report ships waiting for several days, while yard utilization has exceeded 85%, further limiting the release of effective capacity.

Although industry fundamentals are improving, we retain “underweight” ratings on both Maersk and Hapag-Lloyd. In the market, Maersk rose 5.4% to its highest since August 2022; Hapag-Lloyd gained 1.3%, bringing its year-to-date advance to 10.2%. The European blue-chip STOXX 600 index slipped 0.2%, showing that shipping shares were being driven more by their own industry logic than by the broader market.

(The above analysis comes from JPMorgan's latest report. It is for reference only and does not constitute investment advice.)

U.S.-session points: The Fed will remain patient unless price pressures broaden enough to require a forceful response

The easing in U.S. inflation has indeed reduced the pressure for short-term rates to rise further, and the market no longer prices a September rate increase. That does not mean long-dated Treasuries have escaped pressure altogether. Real yields remain high, the fiscal position continues to deteriorate, and the recent 30-year Treasury auction showed that investors still demand substantial risk compensation to hold long-duration assets.

The U.S. economy is still expanding, but the composition of growth is uneven. Real GDP grew at a 1.5% annualized rate in the second quarter, as steady consumption and AI-related capital spending offset the drag from net exports and inventory adjustment. Support for growth remains resilient but is increasingly concentrated in a few areas: high-technology investment continues to provide a floor, while stronger imports of technology products have reduced part of the growth contribution.

Consumer spending remains supportive for now, but its room to rise further is narrowing. Support from tax refunds has faded, real-income growth is weak and the household saving rate is already low. In that environment, demand becomes more sensitive to changes in employment. Recent hiring and wage data both show cooling labor demand, and the economic risk has gradually shifted from earlier “overheating” toward a marked slowdown in job growth.

Prices likewise show two sides. Recent data indicate that some upward pressure from tariffs and energy is fading, core-services inflation continues to cool, and broader price pressure is showing signs of easing. At the same time, inflation remains above the policy target, and the recent rebound has been localized rather than broadly distributed. Patience is therefore still the path of least resistance for policy; a tougher response may be needed only if price pressure becomes broadly stronger again.

(The above comes from a Daily Market Observation article. It is for reference only and does not constitute investment advice.)

The Bank of Japan's rate-rise signals have done little to strengthen the yen because its weakness is rooted in the rate structure

After the joint U.S.-Japan intervention, U.S. economic data were broadly soft and the market reduced its pricing of Federal Reserve rate increases over the coming year. At the same time, speculation grew that the Bank of Japan might raise rates earlier. In principle, both factors should support the yen, yet dollar-yen continues to hover near 160 and has struggled to retreat meaningfully. That suggests weak U.S. data or a small BOJ policy adjustment alone will probably not reverse the yen's weakness.

For a long period, U.S. economic exceptionalism was a major reason dollar-yen rose to multidecade highs. The U.S. economic-surprise index has recently declined while Japanese data have been relatively steady, narrowing the fundamental gap. Even with that shift and the threat of actual intervention by Japanese authorities, the yen has failed to attract sustained buying. Expectations of Fed increases have fallen sharply, but the support for the yen remains limited.

Reports on Thursday said Japan's government was becoming increasingly open to an earlier BOJ rate increase, with September or October seen as possible windows, and suggested it would welcome earlier action to reinforce the intervention. The problem is that the market appears already to have fully priced that prospect: the probability of a September increase is close to 70%, the October meeting is fully priced, and more than three increases are priced by the middle of next year. Simply bringing the timing forward, without materially changing the total amount of tightening, would therefore do little to ease pressure on either the yen or long-end Japanese government-bond yields. The BOJ would need to send a signal more hawkish than the market expects to break the present pattern.

Correlations also show that dollar-yen has had a strong positive relationship over the past week with both short- and long-term U.S. Treasury yields, as well as with the U.S.-Japan rate differential and Fed pricing. Its link with Brent crude has also been close, reflecting geopolitical factors and Japan's sensitivity to energy-import costs. Notably, the pair responds far more strongly to rising Treasury yields and a wider spread than it does to downward moves. Its negative correlation with U.S. equity futures suggests that risk appetite has had relatively little influence.

Taken together, Japan's domestic rate outlook is not the dominant driver of dollar-yen; Treasury yields and the rate gap are the true central variables. Unless the BOJ materially changes expectations for the total amount of tightening, merely moving the date forward is unlikely to reverse the yen's decline. Dollar-yen remains governed by U.S. rates, energy prices and the contest over differentials. A judgment based only on weaker U.S. data or a modest Japanese policy change may be too simple.

(The above analysis comes from analyst David Scutt's Aug. 14 report. It is for reference only and does not constitute investment advice.)

Has gold's recent rise been driven mainly by shorts? Beware the risk of a continued modest pullback

Net-long exposure to gold futures has continued to rise among large speculators and managed funds. The latest weekly Commitments of Traders report shows funds holding 131000 net-long contracts, the most bullish level in more than six months. Large speculators' net-long exposure has also risen to a six-month high near 200000 contracts. Although total long positions are gradually increasing, the main driver of the recent rise in net longs has actually been a sharp reduction in short positions. That trend may continue to support gold because bearish interest in the market is already quite limited.

Two of the three risk-reversal indicators I track turned positive last week, the first time that had happened since mid-April, showing that demand for call options had exceeded demand for puts. Before the breakout, however, the risk reversals accelerated upward from low levels, indicating that options traders rapidly shifted from hedging downside to betting on gains. The indicator has returned to negative territory this week. That is not enough for me to make the consequential judgment that a swing high has formed, but it does suggest the possibility of a modest short-term pullback.

(The above analysis comes from analyst Matt Simpson's Aug. 14 research report. It is for reference only and does not constitute investment advice.)

Expectations of aggressive Fed increases could easily return; what should markets look like next week?

The July CPI report published by the United States on Aug. 12 was broadly in line with market expectations. Together with seasonally low activity in mid-August, that left overall volatility relatively subdued after the release.

The details showed that fuel prices rose less during July's observation period than they had in June, probably surprising the market, although the overall difference between the two months was small. Most other major inflation components, especially rents and food prices, were essentially unchanged from June. With neither headline nor core annual and monthly rates deviating from expectations, market volatility was far below the level normally seen around inflation releases. Thin liquidity as traders took holidays in mid-August reduced the movement further.

Weak July nonfarm payrolls and two consecutive months of declining inflation mean expectations of further hawkish Fed action have temporarily receded. The labor market may be cooling; at least, recent months show no sign of overheating. The annual inflation rate is also below the benchmark interest rate, suggesting little urgency for a September increase.

As of Aug. 14, rate-market data showed only a 34.4% probability of a Fed increase at the September meeting, while expectations of a 50-basis-point increase had been eliminated altogether. The probability of an October increase was also below 50%. Yet the probability that the Fed would remain on hold all the way through 2027 was only 27.4%, still relatively low. If inflation revives while employment strengthens, expectations of aggressive increases could therefore return very quickly.

In the coming week, traders may turn to the minutes of the Fed's July meeting. The document may contain little that is new, because July's weak nonfarm-payroll and CPI reports had not been released when that meeting took place. Unless the Gulf situation changes materially or overall market sentiment shifts markedly, most major markets will probably remain in summer mode for the next several days, with activity and volatility staying low.

(The above analysis comes from analyst Michael Stark's Aug. 14 report. It is for reference only and does not constitute investment advice.)

Markets have opened the champagne for falling inflation without asking whether weaker growth caused it

U.S. July PPI was unexpectedly weak. Markets reduced expectations of another Fed increase this year, Treasury yields retreated from their highs and the S&P 500 set another record. At first glance, the environment for risk assets is becoming comfortable, but I do not think that is the whole message of the data.

Inflation is moving in the right direction, and both headline and core CPI have fallen somewhat, but 3.4% remains far from the Fed's target. Services prices are still rising, while energy is highly sensitive to geopolitics, so inflation pressure has not truly disappeared. Oil remains elevated and the unresolved Middle East situation could reignite inflation at any time. If Brent continues to strengthen, the inflation reading could rebound quickly even as other parts of the economy cool.

The labor market is becoming a new variable at the same time. July nonfarm payrolls were weak, the previous figure was revised down sharply, and although unemployment remains low, labor-force participation continues to fall. Markets initially treated the figures as “good news” because they reduced the need for further policy tightening. But there is a threshold: once employment data shift from a narrative of “easing rate pressure” to one of “weakening corporate earnings and consumption,” they cease to be positive for equities and may instead become negative. Investors now face more than the question of whether inflation will force the Fed to tighten. They must also ask what happens if inflation is cooling because the economy itself is losing momentum.

The September FOMC meeting has become a critical point. Until the Jackson Hole meeting and the August CPI and nonfarm-payroll reports have all taken place, the market will struggle to form a clear direction. Expectations of another increase have fallen sharply, but that judgment rests on a narrative of a gentle economic slowdown and continued disinflation. If the narrative is disproved in either direction, the price-discovery process may be more violent than expected.

(The above analysis comes from analyst Nikolaos Akkizidis's Aug. 14 report. It is for reference only and does not constitute investment advice.)

Jefferies: AI may keep lifting U.S. equities, with earnings growth potentially reaching...

Jefferies expects AI-related companies to remain the principal engine of U.S. corporate-earnings growth and continue leading through 2027. Earnings at the AI constituents of the S&P 500 are projected to grow at a 48% compound annual rate in 2026-27, more than twice the 23% rate for the S&P 500 as a whole and far ahead of the 12% rate for non-AI companies.

The growth is driven mainly by memory, packaging, computing and AI servers as companies continue increasing investment in AI infrastructure. The AI capital-spending “arms race” remains the central earnings driver, though non-AI earnings growth is also expected to remain healthy.

The overall U.S. corporate-earnings outlook has improved as well. Consensus forecasts for 2026 EPS growth among S&P 500 companies have risen to 26.1% from 24.4% a month earlier. Excluding AI-related companies, projected EPS growth has risen to 14.9% from 14% at the end of June.

Nearly 80% of the MSCI USA Index's constituents have reported second-quarter results, and 85% beat earnings expectations. S&P 500 second-quarter EPS rose 40.6% from a year earlier, the strongest quarterly growth of the post-financial-crisis era apart from the pandemic. Third-quarter S&P 500 earnings are expected to rise 28.6% from a year earlier, including projected growth of 61.1% in information technology, led by semiconductor and semiconductor-equipment companies.

Rising capital spending nevertheless creates potential cash-flow pressure. Combined free cash flow at the four largest U.S. hyperscale cloud providers fell to $7 billion in the second quarter from $60 billion in the fourth quarter of 2025. Combined capital expenditure rose to $165 billion from $72 billion in the first quarter of 2025. Despite the additional spending, cloud revenue at Microsoft, Google and Amazon increased 38% from a year earlier to $126 billion, while their contracted revenue backlog reached $2.34 trillion. Those figures show that demand for AI and cloud infrastructure remains strong even as companies face heavier investment requirements.

(The above views come from Jefferies Group. They are for reference only and do not constitute investment advice.)

Japanese retail traders end the intervention trade and return to shorting the yen

JPMorgan said Japanese retail traders had briefly built short dollar-yen positions as expectations of intervention grew, effectively betting on yen appreciation. Those positions have recently been closed to a substantial degree. Retail traders have returned to buying dollar-yen while increasing short-yen positions in other crosses. In other words, although official intervention changed the short-term rhythm of the exchange rate, it did not fundamentally change Japanese retail investors' view that the yen would remain weak over the medium term.

The change matters because Japanese retail traders have long been an active marginal force in yen trading. The renewed shift in positioning shows limited confidence that policy alone can support the yen for a prolonged period. Retail traders are more inclined to see the earlier volatility as a short-term trading opportunity than as the start of a trend reversal. For foreign exchange, this also shows that the influence of the intervention trade is fading; further yen performance will need to depend more on fundamentals and rate differentials than on policy expectations alone.

(The analysis comes from a research report published by JPMorgan. It is for reference only.)

The next risk to global markets is quietly approaching, and AI may be a central force

Large-scale borrowing by AI companies and governments has driven inflation-adjusted borrowing costs in major economies to their highest in more than a decade, creating risks for equities and the global economy. Real yields—nominal bond yields less expected inflation—are a key measure of the true cost of borrowing. The U.S. 30-year real yield is now close to 3%, an approximately 18-year high, while 10-year real yields in the United Kingdom and Germany are also at their highest in more than a decade.

Analysts say sharply higher borrowing by AI “hyperscalers” is a major force as governments continue spending heavily, because investors demand greater returns to absorb the enormous supply of new debt. Although inflation expectations have remained broadly stable during the conflict with Iran, rising real yields have still pushed global nominal yields higher. The U.S. 30-year Treasury auction cleared at 5.22%, the highest since 2001.

LSEG data show that Alphabet, Amazon, Meta and other technology giants have issued nearly $220 billion in bonds so far this year, more than twice the total for all of 2025. BlackRock strategist Vivek Paul said competition for capital has been unusually intense in recent years and that accelerating AI construction is aggravating capital scarcity, a development already visible in bond yields.

Governments are also continuing to borrow heavily. The U.S. budget deficit is about 6% of GDP, or roughly $1.9 trillion, while France's is 5% and the United Kingdom's 4%. Central banks' cessation of bond purchases has also intensified the upward pressure on yields. Al Kettermore, a portfolio manager at Mirabaud Asset Management, said defense, energy-security and infrastructure investment have a larger effect on European bond markets than AI spending. Barclays strategist Kitson said resilient U.S. and European economies and the end of central-bank purchases are jointly pushing real yields higher, while markets' advance pricing of rate increases is amplifying the trend.

In theory, higher real yields should make equities less attractive: bonds offer a better real return and the discounted value of future cash flows falls. So far, however, strong earnings and resilient economies have continued to support rising stock markets. The founder of Satori Insights warned that as large technology companies burn cash faster and rely more heavily on credit, higher real rates will begin to exert pressure. If borrowing costs become too high, companies and households may reduce spending and weaken economic growth. Neuberger's chief investment officer said U.S. real yields had not yet reached the 3%-4% range that restrains economic growth, but their current level was already a “warning signal.” U.S. growth has remained steady at 1.5%-2%, but the threat is approaching. Concerned about fiscal policy, the officer remains cautious on long-term bonds. Barclays strategists expect real yields to keep rising because politicians lack the will to reduce deficits: “The structural factors have not disappeared, and the trend will be difficult to reverse in the short term.”

(The above views come from Reuters analysts. They are for reference only and do not constitute investment advice.)

VIP trading alert: The strait impasse continues to support oil, while the BOJ may accelerate tightening

These are the matters to watch first during the European and U.S. sessions:

U.S. July PPI was unexpectedly below forecasts, further reinforcing the trend of fading inflation pressure and corroborating the earlier mild CPI reading. Interest-rate futures now price only 23BP of Fed increases this year, less than one full increase, as hawkish bets continue to cool. Spot gold nevertheless retreated. During the day, watch how the price tests the Asian-session high. Failure to regain it would raise the risk of continued pressure; a breakout would ease the downside pressure, and attention would turn to whether gold can test Thursday's high.

WTI crude is attempting to rebound again after fluctuating. Bessent has foreshadowed another round of economic sanctions on Iran, while the U.S. Navy says it can maintain the port blockade indefinitely. Traffic through the Strait of Hormuz remains low, and the continuing geopolitical impasse poses a substantive obstacle to hopes for negotiations. If the United States and Iran still take no concrete steps to reopen the strait, physical supply tightness may continue supporting crude prices.

Japan's government reportedly supports faster BOJ rate increases, lifting expectations of action in September-October. Together with the decline in Fed hawkish expectations after weaker U.S. data, this narrows the U.S.-Japan rate differential and restrains upward momentum in dollar-yen. Watch Japanese officials' policy signals closely. Stronger signals of further joint U.S.-Japan intervention or accelerated Japanese tightening could put greater downward pressure on dollar-yen.

Analysts warn that the mechanism for recovering from the next U.S. recession may fail, making the recovery longer than before

Analysts believe that if U.S. GDP contracts for several consecutive quarters in the future, the downturn could be markedly more severe than recent recessions. One important reason is the historically unusual coexistence of three very large U.S. asset bubbles—in equities, real estate and credit. More troubling, the government may also find it harder than in the past to support the economy and financial markets.

The recovery mechanism in previous recessions has generally been similar. The Federal Reserve sharply lowered short-term rates, and long-term Treasury yields usually fell with them. The Treasury increased borrowing, while the central bank provided liquidity by expanding its balance sheet. As financing costs fell and large amounts of liquidity returned to markets, the economy and asset prices gradually recovered.

This time, however, the mechanism may be less effective because the U.S. government's own balance sheet is under much greater pressure. U.S. debt now equals 123% of GDP, well above the approximately 60% seen during earlier recessions. When the next recession begins, the annual fiscal deficit may already be near $2 trillion, whereas the underlying deficit at the start of many earlier recessions was only about $100 billion.

Inflation has also remained clearly above target for more than five consecutive years, completely unlike many earlier recessionary periods. The Fed's balance sheet is now close to $7 trillion, compared with only about $700 billion before the 2008 “Great Recession.” The U.S. personal saving rate is also only about 2.7%, close to a record low. Fiscal, monetary and household capacity to absorb the next economic shock has therefore narrowed substantially.

That means the truly difficult feature of the next recession may not be whether the economy declines, but whether the most effective tools from the past can still work as quickly. If long-term rates fail to fall rapidly as they did in earlier recessions, or even stay high, recovery in both financial markets and the real economy will meet greater resistance. Whether the outcome is an ordinary recession or a deeper contraction, the recovery may last much longer than before.

(The above comes from analyst Michael Pento's Aug. 14 research report. It is for reference only.)

In a fragmented world, geopolitics is no longer a short-term risk but a lasting premium beneath oil prices

Earlier, when an agreement still seemed possible and sea routes remained relatively open, commodity-inflation pressure briefly eased. Conditions deteriorated again this week. Vessel traffic through the important waterway between Oman and Iran has fallen to extremely low levels, meaning global manufacturing and supplies of industrial raw materials may again face greater pressure. The consequences extend beyond simple commodity-price increases. According to the World Economic Forum, roughly one-third of global fertilizer supply and large volumes of critical manufacturing inputs from Persian Gulf ports now face varying degrees of transport bottleneck.

TRT World Research Centre said the International Monetary Fund has warned that the current war is simultaneously raising inflation and lowering economic growth, with poorer economies and countries highly dependent on energy imports likely to bear the greatest pressure. This transmission can be understood as an “indirect humanitarian shock”: security risk first penetrates trade and economic systems, then higher energy, food and living costs turn it into broader social pressure.

More concerning, that economic and social pressure could create new conflict among countries. In a YouGov poll conducted in the United Kingdom after conflict broke out between the United States and Israel on one side and Iran on the other, 53% of respondents thought a third world war could begin within the next 5 to 10 years, an increase of 12 percentage points from April 2025.

In that environment, competition for strategic resources naturally becomes more important, and oil is plainly at the top of the list. In a world of relatively open borders and unobstructed trade routes, war ultimately destroys demand and is treated as bearish for oil. In today's more fragmented environment, where countries increasingly emphasize “national security,” we believe geopolitics itself is gradually becoming a persistent risk premium and source of buying support beneath oil prices.

(The analysis comes from PVM's Aug. 13 research report. It is for reference only.)

Global oil tightness is showing up in crack spreads, not crude prices; the next variable to watch is...

Brent has gained nearly 5% so far this week. Whether the U.S.-Iran conflict can be resolved in the short term remains highly uncertain. Reciprocal attacks by Ukraine and Russia on energy infrastructure are also disrupting crude supply, and, more importantly, tightness in diesel continues to increase. Traders are still waiting for substantive progress toward reopening the Strait of Hormuz, but U.S.-Iran negotiations remain stalled. Together with tightening global fuel supply, these factors continue to support oil and have prompted some energy-market experts to warn that another supply shock may be approaching.

At a stage when news keeps changing and market sentiment swings repeatedly, it is more important to return to the data themselves. The chart shows that diesel and gasoline prices are unquestionably high, but are still near or within their historical high ranges. Notably, nominal refined-product prices in 2008 were not very different from today's; adjusted for inflation, real prices were actually higher then.

The point that truly deserves attention is that, at least for now, global crude-market tightness is appearing more in crack spreads than in the absolute oil price. High crack spreads give refineries an incentive to maintain high operating rates, which in turn continues to support crude demand.

Although U.S. refinery utilization has fallen from the previous week, it remains near the seasonal high for this point in the year over the past 20 years.

With crack spreads this high, one question is how long it will take Asia's largest crude-importing market to increase imports significantly again. Whether the purpose is to expand refined-product exports or simply replenish domestic refined-product and petrochemical inventories, renewed purchasing could become a new marginal source of crude demand. Import data over the next several months will therefore be critical: they will show how long the world's largest buyer of this scale can retain its current demand elasticity.

(The analysis comes from a research report published by Jefferies. It is for reference only.)

The market is debating one central question: how much geopolitical premium is still in oil? Three points to watch today

Market review: International oil prices fell after the latest data showed a large increase in U.S. crude inventories, while traders assessed how much crude is currently passing through the Strait of Hormuz. WTI crude ultimately closed down 1.55% at $80.43 per barrel, while Brent closed down 1.58% at $85.86 per barrel.

Key indicators: An inventory-pricing model shows WTI is broadly fairly valued near $79. The EIA expects global oil production to return to a record high next spring. Persian Gulf crude production is recovering rapidly but remains more than 4 million barrels below its prewar level. In judging supply from here, actual production, tanker flows and exports matter more than simply looking at how much additional output OPEC+ has announced. With WTI retreating toward $82, recovering supply is beginning to restrain the rebound.

Shared views: Stephen Innes said the Strait of Hormuz remains the principal pressure point; as long as it is not completely closed, the global crude market can continue adjusting around the disruption. Sweden's SEB said the volume of crude actually passing through Hormuz each day was clearly higher than earlier market estimates based on public vessel data. Jefferies said the real source of tightness is not simply whether crude exists, but whether it can be converted promptly into enough diesel and other critical fuels.

For more oil signals and news, see today's latest crude-oil report.

Spot gold intraday analysis: A second day of declines as Treasury yields reach their highest since 2001

Gold continued to retreat on Friday morning, extending its decline into a second trading day and testing the $4300 threshold. Before establishing fresh directional positions, traders remain focused on the Middle East, oil prices and the Federal Reserve's rate path. The pullback in gold primarily reflects profit-taking after its earlier rise. Gold had previously rallied as expectations of a September Fed increase cooled substantially, particularly after broadly mild CPI and PPI readings.

TD Securities believes the current rate environment remains relatively favorable for gold. It expects that even if energy prices rise, the Fed is “likely to continue leaving rates unchanged,” allowing “gold to remain well supported in a higher price range.” Put differently, as long as monetary policy stays stable for now, renewed increases in some input costs may not immediately change the market's assessment of the rate-rise path, helping gold remain within its present elevated trading range.

One important source of pressure in the past two days, however, has been the marked increase in long-term Treasury yields. After the U.S. government completed its monthly Treasury auction overnight, the 30-year yield briefly exceeded 5.2%, its highest since 2001. For a non-yielding asset such as gold, renewed increases in long-term real financing costs and opportunity costs naturally restrain short-term performance. At the same time, recurring U.S.-Iran geopolitical tension around the Strait of Hormuz is adding to market volatility.

Even so, oil has fallen for three consecutive trading days because the global demand outlook is weak, temporarily easing the risk that energy prices will again accelerate inflation. Expectations of another Fed increase continue to cool, and with the daily technical structure still bullish, gold may attract dip buyers after the pullback.

Another source of potential support comes from Reuters. It reported that Venezuelan authorities plan to focus on reconstruction and seek the return of gold reserves stored in the Bank of England's underground vaults and valued at about $4 billion.

(The analysis comes from a research report published by Dhwani Mehta on Aug. 14. It is for reference only.)

U.S.-Japan intervention sacrifices the euro, while the BOJ may raise rates further to reinforce policy: three FX points today

Market review: On Thursday, the dollar index closed up 0.01% at 99.97. The benchmark 10-year Treasury yield closed at 4.647%, while the 2-year yield, which is sensitive to the Fed's policy rate, ended at 4.153%.

Key indicators: U.S. July PPI slowed to 4.7% from a year earlier and was flat from the previous month. Together with mild CPI, this showed continued disinflation, weakened pressure for the Fed to restart increases and reduced the market's expected total increase this year to less than 25bp. Initial unemployment claims rebounded while continuing claims fell; the labor market remains broadly stable, and neither wages nor unemployment creates urgency for a policy shift. At the same time, growing expectations of Japanese increases and softer Treasury yields are compressing the U.S.-Japan differential from both sides, limiting upside in dollar-yen. With the differential still positive, however, a sustained decline is not yet established.

Shared views: Deutsche Bank said U.S. core CPI growth in July matched its lowest year-on-year rate since March 2021. Energy and food prices fell, but core-goods prices posted their largest increase since September last year, while demand for AI-related chips is lifting inflation in some technology products. The data as a whole give the Fed room to remain patient, and the probability of a September increase has fallen to 40%. Deutsche Bank nevertheless retains its forecast of a September increase, though the immediate urgency has declined. ING believes the yen's weakness is rooted in an excessively low BOJ policy rate, and that increases could ease both exchange-rate pressure and elevated long-bond yields. During recent coordinated U.S.-Japan intervention, the U.S. Treasury secretary chose to sell euros and buy yen, perhaps to avoid indirectly selling Treasuries. This suggests a preference behind the scenes for BOJ tightening to reinforce intervention.

For more foreign-exchange signals and news, see today's latest FX report.

Hawkish pricing eases further, but will the rate-rise option be taken off the table? Three gold-and-silver points today

Market review: Spot gold met profit-taking on Thursday after reaching almost $4450. It ultimately closed down 1.30% at $4350.07 an ounce. Spot silver closed down 1.34% at $64.47 an ounce.

Key indicators: U.S. July PPI and CPI showed continued disinflation. Lower upstream costs weakened the basis for an inflation rebound and reduced pressure for the Fed to restart increases. Initial unemployment claims have fluctuated but show no trend deterioration, reemployment remains healthy and the labor market does not create urgency to cut, leaving the Fed room to wait. The economic-surprise index has declined and the inflation-surprise index has turned negative, showing slower growth momentum and inflation below expectations, both of which restrain hawkish pricing. Rate futures now price less than one increase this year, and the earlier hawkish expectation continues to cool.

Shared views: Analyst Bill Adams said a sharp increase in portfolio-management service prices within PPI would put upward pressure on core PCE, but that effect may be revised down in September. Overall inflation still leaves a narrow path for the Fed to hold rates in September. Analyst Diane Swonk said CPI was merely moving sideways, supply-side shocks were becoming persistent, services inflation reinforced the hawkish case and the possibility of an increase before year-end had not disappeared. Analyst Przemyslaw Radomski said real yields, not inflation expectations, were the central force restraining silver. Investors are demanding a higher real return, and any inflation rebound would revive expectations of Fed increases and become still more negative for silver.

For more gold-and-silver signals and news, see today's latest precious-metals report.

Actual Hormuz flows may exceed market estimates, giving Trump more time to pressure Iran economically

There is no clear new signal that the Strait of Hormuz will reopen in the short term. Trump currently appears more inclined to apply economic pressure than to resolve the issue directly with bombs and missiles, and that approach plainly requires more time. Put differently, the current state—in which the strait has not truly reopened but some crude continues to flow out—may persist for quite some time.

The latest data show that U.S. crude inventories rose sharply by 17.4 million barrels last week. The Strategic Petroleum Reserve, or SPR, fell by 6.1 million barrels over the same period. Adjusted for that movement, the effective increase in commercial inventories was closer to 11.3 million barrels. That is still a very substantial build, and it does not fit the assumption that the Strait of Hormuz is almost completely closed. A more plausible explanation may be that the actual daily volume of crude passing through the strait is clearly higher than earlier market estimates based on public vessel data.

The U.S. energy secretary said on Tuesday that an average of about 9 million barrels of crude per day had passed through Hormuz over the previous week. If that figure is close to reality, actual crude outflows are plainly far above earlier market estimates. It would also explain why Brent is still only about $89 per barrel rather than $150 or more, as the market had feared.

That may also explain why Trump has recently appeared much more relaxed in dealing with Iran, oil prices and pressure from the midterm elections. If actual crude flows have not fallen to the market's most pessimistic level, there is naturally less urgency for the United States to reopen the Strait of Hormuz by military force. Trump would then have more time to use economic pressure to force Iran to yield.

(Published by Sweden's SEB on Aug. 13. It is for reference only.)

Valuations reset and sentiment cools as Franklin Templeton turns optimistic on August equities

Franklin Templeton remains optimistic about equities in August, believing strong corporate earnings can outweigh geopolitical tension and inflation concerns. Recent volatility has reset technology valuations and cooled overheated sentiment, creating healthier conditions for further gains. The firm retains exposure to the AI theme and is overweight the United States, Japan and emerging markets. It sees less appeal in markets with greater sensitivity to energy and commodities, such as Australia, which is its least-favored region because of weak growth and simultaneous fiscal and monetary tightening.

Franklin Templeton considers the present macroeconomic environment broadly neutral, although further rate increases could restrain the economy to some degree. The macro environment alone is not enough to support its optimistic view of equities. Crucially, however, it also has not weakened the persuasive risk-on argument created by extremely strong corporate fundamentals.

On rates, Franklin Templeton prefers international duration to Treasuries and believes expectations of increases outside the United States are too optimistic. The firm also says U.S. growth is strong but inflation remains high, complicating Fed policy. The stance of the new Fed chair, Kevin Warsh, adds uncertainty, and Franklin Templeton expects the Fed ultimately to tighten policy further.

(The above views come from Franklin Templeton. They are for reference only and do not constitute investment advice.)

Attack on a Saudi refinery reminds investors that geopolitical risk has spread from Hormuz to Saudi energy infrastructure

The Houthis reportedly launched two drones at Saudi Aramco's refinery in Jizan on Thursday, and oil prices moved sharply higher after the news. The attack broadly fits Iran's wider recent counterpressure strategy against Washington and its Gulf allies. The Houthis again used Saudi energy infrastructure and shipping as instruments of pressure, extending their so-called “blockade for blockade” campaign. The attack on the Jizan refinery draws another important Saudi energy target into a conflict already spanning the Persian Gulf, Red Sea and Strait of Hormuz.

Taken alone, a drone attack may not be enough to change the physical supply-demand balance in the global crude market. In the present highly sensitive geopolitical environment, however, markets often do not wait for a detailed damage assessment before responding. The important point is that Saudi energy infrastructure remains within striking distance. At the same time, Tehran is sending tougher military signals and preparing for a confrontation that may last longer than the market initially expected.

That makes the logic of the crude market more complicated. Over recent weeks, every positive signal from diplomatic negotiations led traders to remove part of the geopolitical risk premium from oil prices. The market's central assumption was that the Strait of Hormuz remained the principal pressure point and that, as long as it was not fully closed, the global crude market could continue adjusting around the disruption.

The attack on Jizan introduces a new variable. Risk is no longer confined to the Strait of Hormuz but has spread again to Saudi energy infrastructure. Iran does not need to close Hormuz completely to keep supplying a risk premium to oil. Nor do the Houthis need to shut a refinery for several weeks. They need only keep applying enough pressure to shipping and energy assets to remind the market that the conflict can still directly touch crude and refined-product supply.

(The above comes from analyst Stephen Innes's Aug. 13 research report. It is for reference only.)

Inflation has not frightened the market; expectations of lower real yields are the main force behind silver's rise

Silver pays no interest, so one question always sits behind its price: compared with a safe asset, how much risk-free return does an investor forgo by holding silver? By July, that opportunity cost had risen close to its highest in 18 years. The position then began to reverse. Over the past 10 days, a weak employment report and a second consecutive month of cooler inflation sharply reduced bets on rate increases, while silver rose about 11%. In other words, silver did not rise because inflation frightened investors again, but because inflation was no longer worrying the Fed as much.

On July 23, the U.S. Treasury auctioned 10-year Treasury Inflation-Protected Securities, or TIPS, at a real yield of 2.438%, the highest auction yield for that maturity since October 2008. Investors who bought at the auction effectively locked in a return over the next 10 years of “inflation plus about 2.44%,” without silver's storage costs and without loss from price fluctuations if they hold the bonds to maturity.

That is the opportunity-cost threshold silver must confront, and it has not been this high since the global financial crisis. More easily overlooked is that the same bond auction showed investors expected average inflation of only 2.26% over the next 10 years, below the actual inflation experienced during the past 10 years. This is therefore not a story about markets preparing for runaway inflation. What is actually happening is that war risk, Washington's enormous financing requirement and corporate borrowing for AI infrastructure have combined to make investors demand a substantially higher real return before continuing to lend to the U.S. government.

The distinction matters. If inflation expectations were the true market driver, higher inflation would in theory benefit silver. If real yields are the force restraining silver, however, higher inflation would make conditions worse by putting Fed rate increases back on the table.

(The analysis comes from analyst Przemyslaw Radomski's Aug. 13 research report. It is for reference only.)

Scotiabank: Earlier market expectations were too aggressive, and Warsh should not rely too heavily on pricing to guide policy

Market review of this week's inflation data:

ANZ senior commodity strategist Daniel Hynes is more favorable toward gold. He said the latest inflation data further reduced market bets on rate increases while improving gold's appeal. The market-implied probability of a September increase has now fallen to 34.8%. A recent sequence of data has continued weakening expectations of further monetary tightening, which should support gold over the next several months. At the same time, investors have steadily added gold exposure in recent weeks. Gold ETFs recorded $3 billion of inflows in July, ending two consecutive months of outflows.

Derek Holt, head of capital-markets economics at Scotiabank, also said that although the response to CPI was not severe, the release further corrected earlier, overly aggressive expectations of increases. The market now prices about 10 basis points of tightening for the September FOMC meeting, clearly below the 27 basis points reached at the end of July. It is now fairly clear that earlier pricing of near-term increases was too aggressive: the market had priced about 8 basis points of tightening before the July meeting, yet the Fed ultimately left rates unchanged, while September pricing has continued to fall.

Since the end of July, the 2-year Treasury yield has declined by about 15 basis points to 4.18%. Holt said this may also show that Fed Chair Warsh should not rely too heavily on market pricing to guide monetary policy, because doing so may instead amplify volatility. Similar conditions have appeared before, including during the 2023 Silicon Valley Bank, or SVB, episode and after the global financial crisis, when markets mistakenly bet that inflation would surge.

One more August CPI report will arrive before the September decision, and the Fed's rate-rise option is not truly off the table

Market review of this week's inflation data:

Bank of Montreal chief economist Scott Anderson said CPI had shown easing consumer-price pressure for a second consecutive month, but the Fed would probably continue to wait. The evidence is not yet sufficient for a decisive conclusion, but the report further reduced concern that energy prices would drive another inflationary spiral. Most major price components have cooled substantially compared with the first three months after the war began.

Two months of easing consumer inflation, together with weaker-than-expected July nonfarm payrolls, should give the FOMC more policy room to leave the current rate unchanged at its September meeting. Before making a decision, however, the Fed will see one more August CPI report. Only if later inflation reports provide further evidence that core-services inflation is continuing to slow may the Fed truly take the rate-rise option off the table.

KPMG chief economist Diane Swonk was more cautious. She said July CPI showed more sideways movement than a decisive downward turning point. August gasoline prices could add further volatility to the data, while the current easing in food prices reflects discount promotions more than a broad decline in price pressure. That distinction matters: headline inflation is cooling, but consumers are still absorbing the effects of the earlier price surge while new supply shocks continue to emerge.

She believes supply-side inflation shocks that were supposed to be “one-off” are gradually becoming persistent, weakening the Fed's credibility in controlling inflation. Services inflation also remains elevated and will only reinforce the position of hawks inside the Fed. In some respects, the market has returned to the position at the start of the year before the war: the Fed is again concerned about sticky inflation, and August inflation may even accelerate again. The September meeting therefore remains highly uncertain, and the possibility of another increase before year-end has not disappeared. Because divisions inside the Fed are substantial, however, the exact timing remains difficult to judge.

Argentina crop-region weather forecast for Aug. 14: Dry Pampas and frost risk test wheat growth

Over the next 15 days, temperatures across most of the Pampas will be 2-5°C below normal, with the lowest temperatures arriving next week. Rainfall is expected to be deficient across the western, central and southeastern Pampas, running 15 millimeters below normal over 10 days. Heavy rain will be confined to the northeast, with parts of Entre Ríos Province expected to receive 50 millimeters more than normal.

European Centre, or EC, 45-day outlook: Early and mid-September should be cool and mostly dry. Frost risk will increase in late August and early September and may affect wheat in its vegetative stage, although the effect should be limited at this stage of development.

(The above analysis reflects views from a senior Reuters weather analyst.)

Risk notice: This report is for informational reference only and does not constitute investment advice. Markets involve risk; decisions require caution.

Analysis index

Spot gold hesitates near 4,400: can an approaching “golden cross” dispel traders’ doubts?

U.S. fiscal risk is being transferred to markets as the long-end yield storm reaches the Fed

MUFG: The dollar index may find support at...

UBS: Core CPI cannot truly strip out energy prices, and the U.S.-Iran war’s pass-through is much larger than it appears

Asian iron ore: Improved sentiment and tighter supply support a rebound as lump premiums remain firm

Danske Bank week ahead: Preliminary August PMIs arrive, and the ECB still has room to raise rates

TD Securities: Gold CTA buying should last at least through next weekend; silver above... could trigger another round

Floating and onshore inventories fall together, thinning the global crude-oil “buffer”

July’s “scary data” fall more than expected: Can the Fed still sit still?

Asian methanol: Hormuz blockade deepens supply concerns and sends spot prices sharply higher across Asia

Asian paraxylene: Spot PX rises with upstream markets, but could disagreement over later months compress the premium?

Bank of America: A $1.4 trillion interest bill is changing the Treasury supply-demand equation

The “padding” in UK GDP may cap sterling’s rise, while intervention is only the yen’s first line of defence

Spot gold should keep advancing, but Treasury yields will put up roadblocks

Bank of America: July retail sales may disappoint, placing more obstacles in the way of the Fed hawks’ rate-rise vision

The “scary data” may unleash long-suppressed market emotion, but no single release can dictate direction any longer

The “scary data” arrive tonight, and currency markets may not have a quiet night

Standard Chartered: The Fed is done raising rates this year; markets may react with a lag and the dollar faces mild downward pressure

Asian palm oil fundamentals: Peak festive demand is fully anticipated, so why is the spot market still stuck?

Asian rebar fundamentals: A mine accident lifts raw-material expectations and spot and futures prices as cost concerns intensify

Strait traffic is far below its monthly average, and tension in the crude market may already be reaching a critical point

Asian propylene fundamentals: East China spot prices soften after the typhoon, but can low PDH runs and Korean cuts stop the offshore decline?

Spot silver reaches the bulls' “line in the sand”: how far could a break extend the decline?

Global crude throughput remains far below its historical norm, leaving medium-term oil prices under bearish pressure

Asian soybean fundamentals: Near-term Brazilian cargo trades as U.S. rain prospects and rising Chinese meal stocks shape the outlook

McKinsey: America's “Magnificent Seven” are drawing in global capital as the need to rebalance reaches a critical point

Spot gold has risen nearly 200% in six years, but the gold-to-stock ratio says it is still “cheap”

TD Securities: The Fed has paused RMP purchases, but is quantitative tightening about to restart?

U.S.-session points: Uncertainty over the Fed's reaction function is increasing pressure on the long end of the curve

JPMorgan: A Red Sea route restart is being mistaken for broad normalization, though fully safe passage before 2027 is unlikely

U.S.-session points: The Fed will remain patient unless price pressures broaden enough to require a forceful response

The Bank of Japan's rate-rise signals have done little to strengthen the yen because its weakness is rooted in the rate structure

Has gold's recent rise been driven mainly by shorts? Beware the risk of a continued modest pullback

Expectations of aggressive Fed increases could easily return; what should markets look like next week?

Markets have opened the champagne for falling inflation without asking whether weaker growth caused it

Jefferies: AI may keep lifting U.S. equities, with earnings growth potentially reaching...

Japanese retail traders end the intervention trade and return to shorting the yen

The next risk to global markets is quietly approaching, and AI may be a central force

VIP trading alert: The strait impasse continues to support oil, while the BOJ may accelerate tightening

Analysts warn that the mechanism for recovering from the next U.S. recession may fail, making the recovery longer than before

In a fragmented world, geopolitics is no longer a short-term risk but a lasting premium beneath oil prices

Global oil tightness is showing up in crack spreads, not crude prices; the next variable to watch is...

The market is debating one central question: how much geopolitical premium is still in oil? Three points to watch today

Spot gold intraday analysis: A second day of declines as Treasury yields reach their highest since 2001

U.S.-Japan intervention sacrifices the euro, while the BOJ may raise rates further to reinforce policy: three FX points today

Hawkish pricing eases further, but will the rate-rise option be taken off the table? Three gold-and-silver points today

Actual Hormuz flows may exceed market estimates, giving Trump more time to pressure Iran economically

Valuations reset and sentiment cools as Franklin Templeton turns optimistic on August equities

Attack on a Saudi refinery reminds investors that geopolitical risk has spread from Hormuz to Saudi energy infrastructure

Inflation has not frightened the market; expectations of lower real yields are the main force behind silver's rise

Scotiabank: Earlier market expectations were too aggressive, and Warsh should not rely too heavily on pricing to guide policy

One more August CPI report will arrive before the September decision, and the Fed's rate-rise option is not truly off the table

Argentina crop-region weather forecast for Aug. 14: Dry Pampas and frost risk test wheat growth

Continue reading

Inflation cooled, the hawks are unconvinced and the White House wants cuts: why the Fed may still hold in September

CPI and PPI both softened. Why are markets still hesitant?

U.S. consumers hit the brakes as retail sales post their sharpest drop in more than a year