MPC Markets Morning Call — 13th August 2026: Stocks Edge Higher as Tame CPI Eases Rate Hike Fears
U.S. stocks closed mostly higher overnight as July consumer inflation data came in line with expectations, prompting traders to pare Federal Reserve rate hike bets and push the odds of a September hold to 62%. The S&P 500 rose 0.3% to within striking distance of its record high, while AI infrastructure names CoreWeave and Super Micro Computer each surged 19% on blowout earnings. Oil seesawed as the U.S. and Iran continued to wrangle over the Strait of Hormuz, while gold hit a two-month high above US$4,400/oz. ASX 200 futures are pointing to a modest 24-point decline this morning, with a heavy earnings slate on deck including Telstra, IAG, Origin Energy and Transurban.
Wall Street edged higher overnight after July CPI data matched forecasts — headline inflation rose 0.1% month-on-month and cooled to 3.4% year-on-year, while core CPI decelerated to 2.5% annually, its slowest pace since March 2021. The in-line readings, following last week’s soft jobs report, shifted CME FedWatch pricing to a 62% probability of a September hold, up from 54% pre-data. The S&P 500 gained 0.3% to 7,749 — closing within a whisker of its all-time high — while the Nasdaq advanced 0.5% and the Dow finished fractionally lower. AI infrastructure was the standout theme: CoreWeave surged 19% after raising its full-year revenue outlook to $12.4–$13.2 billion and reporting a backlog of $104 billion, while Super Micro Computer jumped 19% on fiscal 2027 guidance well above estimates. The VIX fell to 14.45, its lowest since January. Geopolitically, the Strait of Hormuz stalemate continued with both the U.S. and Iran claiming control, and Iran’s military signalled a shift to an “offensive doctrine.” Brent crude settled at $88.59 after briefly touching $90, while gold hit a two-month high above $4,400/oz. The U.S. budget deficit widened to $1.8 trillion through July — already exceeding the full fiscal 2025 total — and a $42 billion 10-year Treasury auction priced at the highest yield since 2007 (4.683%).
July CPI came in line — headline +0.1% m/m (3.4% y/y), core +0.2% m/m (2.5% y/y, slowest since March 2021) — shifting September Fed hold odds to 62% from 54% and easing near-term rate hike fears.
S&P 500 rose 0.3% to 7,749, edging within reach of its all-time high; Nasdaq gained 0.5%; VIX fell to 14.45, its lowest level since January; the Philadelphia Semiconductor Index advanced 2.5%.
CoreWeave surged 19% after posting record Q2 revenue of $2.58 billion, raising its full-year outlook to $12.4–$13.2 billion, and reporting a $104 billion backlog; Super Micro jumped 19% on above-consensus FY27 guidance; Nebius soared 34% on a 514% jump in AI cloud sales.
Oil seesawed as the U.S. and Iran each claimed control of the Strait of Hormuz — Brent briefly touched $90 before settling at $88.59; the IEA now expects world oil demand to decline by 1.6 million bpd in 2026, 510,000 bpd more than its prior estimate.
The U.S. budget deficit widened to $1.8 trillion through July — already exceeding the full FY2025 total — while a $42 billion 10-year Treasury auction priced at 4.683%, the highest yield since 2007; gold hit a two-month high above $4,400/oz.
ASX 200 futures point to a 24-point (−0.3%) open at 9,128; key ASX earnings today include Telstra, IAG, Origin Energy, Transurban, ASX Ltd, Orora and Treasury Wine Estates; yesterday CBA beat on profit but slipped on valuation concerns while Suncorp rallied on a special dividend.
In-Line CPI Tips the Scales Toward a September Hold
The July consumer price index report was the key event overnight and it delivered no surprises. Headline CPI ticked up 0.1% month-on-month, after falling 0.4% in June, while cooling on a year-on-year basis to 3.4% from 3.5%. Core CPI, which strips out food and energy, increased 0.2% month-on-month and decelerated to 2.5% annually — matching the slowest pace since March 2021. All four measures matched consensus expectations.
For the Federal Open Market Committee, the in-line readings give it breathing room to hold interest rates steady, particularly after last Friday’s weaker-than-expected July jobs report. The CME FedWatch tool now shows a 62% probability of a September hold, up from 54% before the data, and around 50-50 before last week’s employment report. Swap markets are pricing roughly a 40% chance of a September hike, down from approximately 50% prior to the CPI release.
“Today’s data, in my opinion, makes it less likely we will see any hike in interest rates this year. The 2.5% core number is moving slowly in the right direction,” Peter Tuz, president at Chase Investment Counsel, told Investing.com. However, consumer inflation is likely to tick back up in August after global oil prices soared more than 20% last month, and the Strait of Hormuz remaining closed keeps upside inflation risks firmly in view.
A $42 billion 10-year Treasury auction priced at 4.683% — the highest yield since 2007 — with indirect bids well above recent averages. The yield curve bull-steepened, with 2s/10s hitting 49bps and 2s/30s reaching 107bps, both the steepest since May. A 30-year bond sale on Thursday is expected at the highest financing rate in a quarter of a century. The 2-year yield slipped 1bp to 4.20%, while the 10-year was little changed at 4.69%.
AI Infrastructure Rally — CoreWeave, Super Micro and Nebius Surge
The AI infrastructure buildout theme powered the session’s biggest moves. CoreWeave surged 19% after the AI cloud provider posted record second-quarter revenue of $2.58 billion (beating estimates of $2.56 billion), raised its full-year revenue outlook to $12.4–$13.2 billion, and lifted its annual capital spending forecast. Its revenue backlog rose to $104.2 billion, and the company has already secured over $25 billion in net new customer commitments early in Q3. CEO Michael Intrator hailed it as CoreWeave’s “strongest bookings quarter” in history, noting that near-term capacity is effectively sold out, enabling the company to negotiate contracts with margins 5–10 points higher than recent quarters.
Super Micro Computer jumped 19% and closed as the top percentage gainer on the S&P 500 after forecasting fiscal 2027 revenue above Wall Street estimates. The company’s Q4 gross margin of 17.5% also exceeded both its preliminary estimate and initial forecast. Nebius Group soared 34%, reporting a 514% jump in Q2 AI cloud sales to $575 million as it won four contracts averaging over $1 billion each during the quarter.
The broader tech complex joined the rally: Nvidia rose 3%, Dell gained nearly 10%, Micron added 4.9%, and the Philadelphia Semiconductor Index advanced 2.5%. Cisco forecast fiscal 2027 revenue and earnings well above consensus after a strong fourth quarter, though its shares slipped 2% as investors appeared to lock in gains. The S&P 500 technology sector rose 1.1% overall.
Cava Group rallied 14.2% after beating Q2 sales and profit expectations. Lumentum surged 13.6% on above-consensus Q1 revenue guidance. SpaceX extended its five-session rebound to more than 36%, rising 9.7% to $146.27. Eight of the 11 S&P 500 sectors rose, led by real estate (+1.08%) and information technology (+1.06%), while communications services and materials declined.
Hormuz Stalemate Deepens as Iran Pivots to “Offensive Doctrine”
Oil prices swung between marginal gains and losses as the U.S. and Iran continued to independently assert control over the Strait of Hormuz, with little sign of a breakthrough towards reopening the critical waterway. President Trump claimed “total control” on Truth Social, while Iran’s Supreme National Security Council secretary Mohsen Rezaee stated the strait “won’t open until the U.S. changes behaviour and accepts Iran’s conditions.” Brent crude briefly touched $90.06 before settling at $88.59, down 0.4%.
In a notable escalation, Iran announced a military reorganisation shifting to an “offensive doctrine.” General Mohammad Reza Naqdi of the IRGC told state TV: “Whenever the conditions are favourable and the order is issued, we must be able to take the operation into enemy territory.” New IRGC commander Ahmad Vahidi has vowed to keep Hormuz closed “as long as the United States continues hostile actions.” Pakistan’s defence minister said the sides are “close to some sort of arrangement,” though former U.S. deputy secretary of state Wendy Sherman was blunter: “I think the reality is for the foreseeable future, if not forever, Iran will control the Strait of Hormuz.”
The IEA now expects world oil demand to decline by 1.6 million barrels per day in 2026 — 510,000 bpd more than its prior estimate — with a bounce of 2.4 million bpd expected in 2027. It estimates 8.3 million bpd of Gulf output remains shut in. OPEC’s latest monthly report was more optimistic, forecasting demand growth of 600,000 bpd this year, down from its prior 800,000 bpd estimate. Houthi rebels attacked commercial shipping in the Bab el-Mandeb Strait, killing six people, and the U.S. Navy fired missiles at a Panama-flagged vessel near the Gulf of Oman for violating its blockade.
U.S. Budget Deficit Blows Out to $1.8 Trillion Through July
The U.S. government posted a $432.3 billion budget deficit in July — a record for the month and nearly 50% wider than July 2025 — pushing the fiscal-year shortfall through the first 10 months to $1.799 trillion, already exceeding the full-year 2025 total. Outlays surged to $766.3 billion in July while receipts were $334.0 billion. For the fiscal year through July, spending has reached $6.28 trillion against receipts of $4.49 trillion.
The gross national debt is about to hit $40 trillion. Net interest on the federal debt has reached $931 billion through July, while national defence spending stands at $804 billion. Norway’s $2.3 trillion sovereign wealth fund provided a stark contrast, posting a record profit of $184.3 billion in the first half of the year — more than the nominal annual GDP of around 130 countries.
While the July CPI gives the Fed more room to hold, inflation running above target and swelling deficits are keeping long-dated yields elevated. Investors continue to fully price a hike by year-end. The Jackson Hole symposium at month’s end may offer hints from Chairman Warsh, though he has deliberately avoided forward guidance since taking the helm. PPI data on Thursday and the next round of August employment and inflation data will be critical inputs for the September decision.
ASX 200 futures are pointing to a 24-point (−0.3%) decline at the open after a flat-to-slightly-positive Wall Street session. A heavy ASX earnings day awaits, with results due from ASX Ltd, Insurance Australia Group (IAG), Orora, Origin Energy, Transurban, Telstra and Treasury Wine Estates. Yesterday, CBA delivered a clean 7% cash profit beat and lifted its dividend but the share price slipped as investors focused on post-budget mortgage application weakness and rich valuations. Suncorp saw headline profit fall hard on natural hazards but underlying earnings rose, margins stayed strong and a special dividend plus buyback drove a solid rally. Computershare missed estimates and guided mid-single-digit EPS growth, triggering a sharp sell-off. Seek got crushed on soft FY27 guidance despite excellent operating numbers.
- U.S. PPI inflation (July) — due Thursday; components feed into the PCE, the Fed’s preferred inflation gauge
- U.S. 30-year Treasury auction ($25 billion) — expected at the highest financing rate in 25 years
- UK GDP (Q2 preliminary estimate) — an early read on the UK economic trajectory
- Japan wholesale inflation (July)
- Fed speakers — Cleveland Fed President Beth Hammack and Richmond Fed President Thomas Barkin
