Morning Market Brief – 2026-08-10

Good morning! We are entering a new week in which financial markets will attempt to maintain the excellent sentiment of recent days. Last week's weaker US labor market data sparked hopes for a more dovish approach from the Federal Reserve (Fed), pushing major Wall Street indices to historical highs. Now, investor attention shifts to key inflation readings from the US, which will ultimately verify this optimism. At the same time, we are observing Japan's fascinating, multi-front struggle to stabilize its currency, as well as further signals of sluggish demand coming from the Chinese economy.

Geopolitical Environment

High uncertainty persists in the Middle East, which is stabilizing crude oil prices – in the first half of August, a barrel of Brent cost around USD 82–84, and WTI around USD 77–79. Although Iran is in talks with Oman regarding new coordinates for shipping routes in the Strait of Hormuz, Tehran signals that this does not mean an immediate full reopening of the strait. On the contrary, reports suggest that a restrictive plan is being considered to ban transit for US and Israeli vessels and impose additional fees on countries deemed "hostile." Additionally, the risk to maritime transport in the Red Sea and Gulf of Aden region remains elevated due to repeated attacks attributed to the Yemeni Houthi movement. (Sources: Reuters; CNBC; Bloomberg)

Key Highlights Today

• Wall Street at record highs and a week of truth for inflation. US indices S&P 500 and Dow Jones closed last week at record levels. The market interpreted the weaker NFP (Non-Farm Payrolls) report as an argument that the Fed will not need to rush a September rate hike – the probability of such a move in futures contracts dropped significantly. Confirming strong risk appetite, the VIX index (the so-called fear index) remains at historically low levels, while the European STOXX 600 index holds near record highs. Currently, investors are holding their breath ahead of Wednesday's and Thursday's inflation data. Market consensus assumes US headline inflation (CPI) will come in at around 3.0–3.5% YoY, with core inflation (excluding volatile food and energy prices) at around 2.5%. (Sources: CNBC; Reuters; Morningstar; Kraken Research)
• Japan on multiple fronts – from massive interventions to a hawkish central bank. A lot is happening around the Japanese yen (JPY). On one hand, it was revealed that on April 30, authorities conducted a record single-day currency intervention, buying yen worth nearly USD 40 billion. Furthermore, in late July, we witnessed a rare, coordinated intervention by the US Department of the Treasury and Japanese authorities. Despite these massive actions (and a sharp appreciation of the yen right after weak US data), the USD/JPY rate has begun rising again, approaching 158.4. The prolonged weakness of the Japanese currency is the result of a large interest rate differential between the US and Japan, as well as huge servicing costs for Japanese public debt. However, help for the currency may come from the Bank of Japan (BOJ) – newly published minutes from recent meetings show that some board members see growing inflation risks and are considering flexible, faster rate hikes to bring policy closer to a "neutral" level (one that neither stimulates nor slows down the economy). It is worth adding that despite currency turbulence, the Japanese Nikkei 225 stock index recorded a strong rebound to around 66,000 points in the first week of August, pulled upward by the tech sector. (Sources: Trading Economics; Reuters; Financial Times; MUFG Research; Yahoo Finance)
• China struggles with sluggish domestic demand. As we wrote recently, the Middle Kingdom has a problem with weak price pressure, which was just confirmed by official data. July consumer inflation (CPI) rose by only 0.5% YoY (below expectations of 0.8%), and in monthly terms, it actually fell by 0.1%. Producer price inflation (PPI) rose by 3.5% YoY, which was also below consensus and marked a slowdown from June. The National Bureau of Statistics (NBS) attributes these readings to slower growth in fuel prices and weaker demand in construction and parts of industry. For markets, this is another signal that the Chinese economy may need additional stimulus packages. (Sources: NBS; People’s Daily; Reuters)

Market Background

• Eurozone inflation driven by energy. Ahead of us is a week with macroeconomic data from Europe, but it is worth recalling the current price landscape. July's HICP (Harmonised Index of Consumer Prices) in the Eurozone rose to around 2.9% YoY, driven mainly by higher energy prices. Meanwhile, core inflation in Europe remains at a more stable level around 2.5% YoY. (Sources: Morningstar; ECB)
• Painful valuation check for Chinese giant Shein. According to recent reports, the popular e-commerce platform is aiming for a valuation of USD 30–40 billion for its planned initial public offering (IPO) in Hong Kong. This is a drastic cut in expectations compared to its peak valuation of around USD 100 billion in 2022 and private funding rounds in 2023 and 2024, which valued the company at around USD 64–66 billion. (Sources: Reuters; The Business Times)

Key Events to Watch

The coming days will be dominated by US data, which will dictate market expectations regarding central bank policies.

• 11.08 (Tuesday) 06:30 – Australia: RBA Interest Rate Decision. The market is weighing the chances of rates holding at 4.35% against economic slowdown and persistent inflation.
• 12.08 (Wednesday) 14:30 – USA: Consumer Inflation (CPI) for July. An absolutely crucial report for the week. A key benchmark for the Federal Reserve when determining the future path of interest rates.
• 13.08 (Thursday) 08:00 – United Kingdom: Preliminary Q2 GDP. The reading is significant for the Bank of England in assessing recession risks.
• 13.08 (Thursday) 14:30 – USA: Producer Price Inflation (PPI). Shows price pressures at the production level (an early stage of the supply chain), serving as a leading indicator for consumer inflation. At the same time, we will learn Initial Jobless Claims.
• 14.08 (Friday) 11:00 – Eurozone: Q2 GDP Estimate. Key data for assessing the pace of recovery in the European economy.
• 14.08 (Friday) 14:30 – USA: Retail Sales. An indicator of consumer strength and domestic demand health, showing how Americans are responding to current interest rates. At 16:00, we will also get preliminary Consumer Sentiment (University of Michigan).