Morning Market Brief – 2026-08-11

Good morning! Following last week's wave of optimism that drove US stock indices to historical highs, markets are entering a clear wait-and-see mode. Investors are holding their breath ahead of crucial US inflation readings that will decide the future path of interest rates. Concurrently, geopolitical clouds are gathering again on the horizon—a stalemate in negotiations around the Strait of Hormuz is driving up oil prices, reminding markets that the fight against global inflationary pressures is far from over. We are also seeing interesting reshuffles in the foreign exchange market, where the Japanese yen is losing value again, and the Australian central bank is sending hawkish signals.

Geopolitical Environment

The situation around the Strait of Hormuz is becoming increasingly tense, which translates directly to the commodities market. According to the latest reports, negotiations between the US and Iran regarding an agreement and full opening of the route to normal traffic have reached a deadlock. The main bone of contention is transit fees for a "safe passage guarantee"—Washington strongly opposes any fees, while Iran and Oman are considering charging a fraction of the value of the cargo being transported.

At the same time, Iran and Oman have already agreed on the coordinates for a new shipping route. Iranian proposals stipulate that vessels linked to the US and Israel may be subject to restrictions or a complete ban on entering the Persian Gulf. As a result, we are observing a significant drop in the number of vessels passing through the strait. Traffic restrictions and supply risks are boosting crude oil prices—in recent days, a barrel of Brent crude rose to around USD 87.5–88, while WTI is hovering in the mid-70s USD range. Markets view this as an additional factor boosting risk aversion and renewing fears of global inflation. (Sources: Reuters; The Guardian; Trading Economics; US Congressional Research Service)

Key Highlights Today

• Equity markets consolidate near peaks ahead of US inflation data. The S&P 500 index closed above 7,700 points for the first time in history in early August and is currently moving in a narrow range just below its record highs. Excellent sentiment is supported by the ongoing earnings season—around 86% of S&P 500 companies that have reported Q2 earnings beat analysts' forecasts, with cumulative earnings growth (EPS – earnings per share) reaching approximately 45–50% year-on-year. Despite these strong numbers, the market is awaiting Wednesday's US consumer price inflation (CPI) reading. The consensus expects headline inflation to rise by about 0.1–0.15% MoM (approx. 3.4% YoY) and core inflation by about 0.2% MoM (approx. 2.4–2.5% YoY). (Sources: CNBC; FactSet; TD Securities)
• US bond yields rise as chances for rate cuts melt away. Recent days have brought a rise in 10-year US Treasury yields toward 4.7%, the highest level since the beginning of the month. Expectations regarding the Federal Reserve (Fed) are also shifting. CME FedWatch tools are currently pricing in nearly a "coin toss" regarding a 25-basis-point rate hike in September (probability around 50–55%). As a reminder, not long ago the market was counting on a softer Fed approach. Adding fuel to the fire, Cleveland Fed President Beth Hammack emphasized that if inflation remains stubbornly elevated, further hikes may be required. (Sources: Trading Economics; CME FedWatch; Federal Reserve Bank of Cleveland)
• Hawkish hold in Australia. As expected, the Reserve Bank of Australia (RBA) left its cash rate unchanged at 4.35%. However, the post-meeting statement carried a distinctly hawkish tone (a so-called hawkish hold). The RBA noted that inflation (3.8% YoY in June) remains too high, and its return to the 2–3% target could take until 2027. The bank maintained the message that if price pressures intensify again, further rate hikes remain on the table. The Australian dollar (AUD/USD) responded by stabilizing around 0.705–0.706, remaining close to its multi-week highs. (Sources: Reserve Bank of Australia; Saxo Markets; Trading Economics)
• Yen gives back intervention gains even as speculators flee. The USD/JPY pair returned to around 159.2, meaning the Japanese currency has given up roughly half of the gains made following the high-profile, coordinated US-Japan intervention in late July. Interestingly, data from the US CFTC shows that last week leveraged funds executed the largest weekly reduction in short yen positions since 2007 (cutting them by approx. 60,000 contracts). Why is the yen weakening again then? Analysts point to the persistent, massive interest rate differential between Japan and the US, as well as Japan's vulnerability to rising energy prices, which continues to favor carry trade strategies (borrowing low-yielding yen to invest in higher-yielding dollars). The Bank of Japan is closely monitoring the situation and has not ruled out further rate hikes. (Sources: Trading Economics; CFTC; Reuters)

Market Background

• Asia under pressure from oil. Geopolitical tensions and rising energy costs are taking their toll in Asia. Reuters characterizes trading across many Asian exchanges as directionless and mixed. Risks around the Strait of Hormuz are clearly weighing on emerging market indices. (Sources: Reuters)
• A slight pause on global trading floors. Ahead of key data, major US indices are showing modest declines in current trading. A similar picture is emerging in Europe—the UK's FTSE 100 is seeing a mild pullback after media outlets recently made headlines over its all-time highs. This is a natural cooling period following a wave of gains. (Sources: Reuters; Seeking Alpha)
• US leading indicators. In addition to the paramount CPI report, this week's calendar highlights upcoming releases of the Small Business Optimism Index (NFIB) and US existing home sales data, which will help gauge the health of the housing sector and the sentiment of American business owners. (Sources: MarketWatch; Yahoo Finance)

Key Events to Watch

Ahead lies a week dominated by US data, which could define market trends for the rest of the summer.

• 11.08 (Today) 11:00 – Germany: ZEW Indicator. A survey assessing the sentiment of analysts and institutional investors regarding the economic outlook for Germany and the Eurozone.
• 12.08 (Wednesday) 08:00 – Germany: CPI Inflation. Confirmation of final data for July, crucial for evaluating price pressures in the Eurozone's largest economy.
• 12.08 (Wednesday) 14:30 – US: July CPI Inflation. The week's most important release. This report will test market expectations regarding the Fed's upcoming interest rate decisions.
• 13.08 (Thursday) 08:00 – UK: Preliminary Q2 GDP. The data will guide expectations regarding economic growth pace and further rate cuts by the Bank of England.
• 13.08 (Thursday) 14:30 – US: PPI Inflation and Initial Jobless Claims. The producer inflation reading will reveal price pressures at the wholesale level. Concurrently, labor market data will be released.
• 14.08 (Friday) 04:00 – China: Industrial Production and Retail Sales. An important data batch indicating the strength of recovery in the Middle Kingdom (especially relevant given recent data showing sluggish domestic demand).
• 14.08 (Friday) 14:30 – US: Retail Sales. The July reading will indicate the strength of the American consumer, the main pillar of growth for the US economy.