Morning Brief: US August CPI Surges to Hike Bets; Saudi East-West Pipeline Hit by Drone Attack

1 Key Snapshot

· 📊 US August CPI rose faster, with core CPI posting its largest monthly gain in four months, bolstering bets for a September Fed rate hike.

· 🛢️ Saudi Arabia temporarily shut its East-West pipeline after a drone attack. WTI crude gained roughly 9% for the full week.

2 Market Outlook

Key Events

- US August CPI accelerates, lifting rate hike expectations. Core CPI saw the steepest monthly rise in four months, reinforcing market pricing for a Fed September hike. → US 2-year Treasury yield climbed 8.6 bps to 4.636%; 10-year yield rose 2.29 bps to 4.967%. The three major US indexes closed higher on Friday but ended the week in the red.

Exclusive View

The simultaneous pickup in CPI and shutdown of Saudi pipelines creates dual pressure. CPI signals demand-side inflation risks while the pipeline outage represents a supply-side geopolitical shock. Combined, these factors push the Fed closer to raising rates.

3 Overnight Market Action

US Equities

S&P 500 +0.86% at 7656.98, weekly loss 0.8%; Nasdaq +0.96% at 26333.04, weekly loss 0.7%; Dow Jones +0.98% at 52573.29.

European Equities

Pan-European STOXX 600 +0.5% at 639.1. France CAC 40 +0.78%, Germany DAX +0.82%, UK FTSE 100 +0.39%.

Fixed Income

US 10-year Treasury yield +2.29 bps to 4.967%; 30-year -1.1 bps to 5.35%; 2-year +8.6 bps to 4.636%.

Commodities

WTI Oct contract -2.00% at $100.44/bbl; Brent fell nearly 3% to $104.61/bbl, both pulling back from four-month highs. Crude climbed roughly 9% over the week. COMEX Gold +0.04% at $4408.90/oz; Silver +0.40% at $65.19/oz.

FX

Dollar Index -0.17% at 98.90; USD/JPY -0.5% at 153.68; EUR/USD -0.1% at 1.1596.

Crypto

Bitcoin +0.3% at $77439.13; Ethereum +3.4% at $2545.44.

4 Macro News

1. 📊 US August CPI accelerates, core CPI posts four-month biggest monthly gain. This strengthens market expectations of a Fed rate hike in September. The 2-year Treasury yield rose 8.6 bps to 4.636%, while the 10-year rate nears the 5% threshold.

Insight: Higher core CPI shows inflation pressures have spread from energy to core services. After PPI jumped to 5.4% year-on-year, CPI further validates the hiking trajectory.

2. 🛢️ Saudi Arabia shuts East-West pipeline, handling 4% to 5% of global oil supply. The pipeline was suspended after drone strikes, moving 4-5 million barrels per day in recent months. US-Iran tensions directly threaten core infrastructure of the world’s top oil exporter.

Insight: Geopolitical supply shocks are shifting from shipping lanes like the Strait of Hormuz to onshore production assets. Crude rose about 9% for the week, as markets keep pricing in supply disruption risks.

3. 💰 US fiscal deficit nears $2 trillion, interest payments top $1 trillion for the first time. Long-end US bonds are pricing in a debt spiral, with 30-year yield holding at the high level of 5.35%.

5 Global Corporate News

1. 🤖 Anthropic is negotiating anchor investment with Nvidia. The proposed IPO could raise up to $100 billion with valuation near $2 trillion. If completed, it will be the largest IPO in history, accelerating capitalization of leading AI application firms.

6 Today’s Focus

· 🕊️ Iran to discuss Strait of Hormuz deal with Gulf states. With crude above $100/bbl and Saudi pipeline attack, negotiation results will set the direction for geopolitical risk premium.

· 📊 Watch for final Fed policy signals ahead of September FOMC meeting.