Morning Brief: Soft US Economic Data Dials Back Hike Odds; S&P 500 Pulls From Record Highs; Hawkish Iran Pushes Crude Higher

Core Snapshot

📊 US July retail sales fell 0.6% month‑on‑month, marking the steepest drop in more than a year and weighing on September rate‑hike expectations.

🕊️ Iran insists it holds full authority over Strait of Hormuz navigation and has struck a transit framework with Oman, barring US military forces from the waterway. Trump urged Americans to accept higher oil prices.

I. Market Outlook

Key Events

‑ 🕊️ Iran takes hardened stance: IRGC chief stated Iran controls all Strait of Hormuz opening‑and‑closing mechanisms, reached a transit arrangement with Oman, and said US forces have been expelled and are barred entry. No decision has been made on resuming talks with Washington. Trump said he would declare the Strait of Hormuz US territory should Iran be defeated. → WTI crude +1.42% at USD 82.40/bbl, +5.4% week‑to‑date; Brent crude +1.67% at USD 88.52/bbl, +5.95% week‑to‑date.

Exclusive View

Territorial‑toned rhetoric from both sides over the Strait of Hormuz has escalated. Trump’s remark about claiming the territory and Iran’s announcement of expelling US forces signal little willingness to compromise, keeping crude supported by geopolitical risk premiums. Worse‑than‑expected US retail sales offered fresh evidence of cooling domestic demand, further trimming odds for a September hike. US equities pulled back modestly; the S&P 500 halted its two‑session winning streak but still posted a third straight weekly gain.

II. Overnight Market Performance

‑‑ US Equities: S&P 500 ‑0.17% at 7785.76, +0.36% week‑to‑date; Dow Jones ‑0.20% at 53732.41, ‑0.56% week‑to‑date; Nasdaq ‑0.28% at 26729.16, +0.14% week‑to‑date.

‑‑ European Equities: STOXX 600 ‑0.21% at 657.86, ‑0.36% week‑to‑date. DAX ‑0.08%, CAC 40 ‑0.06%, FTSE 100 ‑0.34%.

‑‑ Fixed Income: 10‑year US Treasury yield around 4.69%, up roughly 5 bps intraday, +4 bps week‑to‑date; 2‑year yield near 4.17%, +3 bps intraday, ‑3 bps week‑to‑date.

‑‑ Commodities: Sep WTI crude +1.42% at USD 82.40/bbl, +5.4% WTD; Brent +1.67% at USD 88.52/bbl, +5.95% WTD. COMEX Gold +0.39% at USD 4380.40/oz, +0.91% WTD; Silver +0.18% at USD 64.988/oz, +2.61% WTD.

‑‑ FX: US Dollar Index neared two‑month lows. EUR/USD +0.03% at 1.1527; USD/JPY ‑0.04% at 159.48; GBP/USD ‑0.05% at 1.3485.

III. Macro News

1. 📊 US July retail sales dropped 0.6% MoM, the largest monthly decline in over one year

The print came in well below consensus, pointing to material softening in consumer spending and depressing September hike probabilities.

Insight: This retail print is the clearest recent signal of US economic cooling. If consumption weakness persists, Fed discourse may shift from “pause hikes” toward opening discussions on rate cuts later this year.

2. 🕊️ US‑Iran rhetorical escalation over Strait of Hormuz sovereignty

IRGC commander said Iran controls strait operations, has agreed transit terms with Oman and expelled US military assets. Trump called on the public to accept higher fuel costs and said he would claim the Strait as US territory upon defeating Iran.

Insight: Territorial‑framed statements suggest the geopolitical impasse will persist near‑term. Crude’s geopolitical risk premium is set to remain in place.

3. 🇪🇺 European long‑end bond yields surge; 30‑year German bund hit 2011 high

Friday’s session saw the 30‑year Bund touch levels unseen since 2011, while 10‑year French OATs hit a 2009 peak. Building ECB‑hike expectations triggered long‑dated bond sell‑offs.

4. 🛢️ Fed unexpectedly suspends RMP asset purchases, pause expected to last through at least October

TD Securities sees a possible restart before year‑end. The halt stems from improved system liquidity and lower Treasury financing needs.

IV. Corporate News

1. 💾 NVIDIA ramps CPO switchboard mass production; AI datacenters enter silicon‑photonics era

Major technical leap in AI interconnection hardware, set to boost datacenter energy efficiency and bandwidth density.

2. 💾 SK Hynix Chairman apologises over rapid price increases for AI memory

Tight AI‑storage supply‑demand dynamics keep prices elevated. SK Hynix is scouting US sites for front‑end wafer fabs, as major AI buyers push for supply‑chain restructuring.

3. 🤖 OpenAI internal turmoil deepens: constant restructuring, staff burnout, ongoing executive departures

IPO plans have quietly slipped to next year, highlighting governance growing‑pains among leading AI firms amid commercial acceleration.

V. Today’s Focus

· 🇯🇵 Japan Q2 GDP: key gauge of recovery momentum, will shape BOJ rate‑hike pricing.

· 🇰🇷 South Korean equity markets closed for public holiday.