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Apple revealed its new foldable iPhone on Wednesday afternoon, and Wall Street analysts were largely positive about the specs and demand outlook. However, enthusiasm for the device diminished by mounting concerns that restrained price hikes across the iPhone lineup could pressure hardware margins.

Apple shares are up 1% in premarket trading in New York and about 1.6% higher since the unveiling of the new foldable iPhone and iPhone 18 Pro lineup. The new foldable iPhone starts around $2,000, with the premium model costing up to $3,199.

Did Apple learn anything from the failed launch of the $3,500 Vision Pro?

JUST IN: Internet accuses Apple of photoshopping "freakishly long" fingers into its iPhone Duo marketing, to make the massive foldable look easier to hold one-handed. pic.twitter.com/D8C19tqlFa

— Polymarket (@Polymarket) September 9, 2026

The question floating around multiple Wall Street desks overnight and into Thursday morning is how much of that foldable iPhone and new lineup demand translates into profit.

Jefferies analysts, who maintain an underperform rating and a $263.66 12-month price target, said Apple appears focused on boosting volumes at the expense of margins. Unchanged pricing for the iPhone 17 and Air could support demand while pressuring profitability.

TD Cowen, which rates Apple a "Buy" with a $400 price target, similarly warned that modest price increases could create hardware gross-margin headwinds. The analysts highlighted the new 2-nanometer chip's doubling of AI speed.

"Price increases were modest, which aids affordability, but hardware GM could face more headwinds in the coming year," TD Cowen analysts said.

Vital Knowledge analysts noted, "Duo is a very 'cool' device, with a competitive price point, but it remains to be seen whether Apple can manufacture enough of them to meet demand."

Here is Citi analyst Atif Malik's first take on iPhone Duo:

Apple launched a new foldable product cycle Duo under the new CEO John Ternus today. With a 7.6" inner display and a more iPad-like multi tasking experience, Duo is the biggest new hardware category since Apple Watch/Airpods. 

The launch of the iPhone 18 Pro/Pro Max (no standard iPhone 18) and the starting price of $1,999 on Duo shows Apple's iPhone line up is heavily skewed towards premium devices this fall.

Moreover, Apple repriced the IP16/IP17 portfolio by ~$100 with bigger ~$300 increase on higher 1TB storage tier we believe to offset higher memory component prices. Overall, IP18 specs, foldable ASP are in-line and IP18 ASPs below our ~$200 preview. Net-net, with price increase on the older iPhones, we maintain our model and gross margin assumptions. New Siri AI is the most important software announcement as Apple moves from AI features towards AI agent integrated into iOS27. Maintain Buy $365 TP.

Bernstein's Mark Newman asked clients, "What about gross margins?"

Newman explained:

Yesterday Apple held its Surprise and Shine product release, this note summarizes the products announced including specs and prices and potential impact to gross margins.

The iPhone 18 Pro and Pro Max deliver meaningful improvements with smaller price increase than expected at entry storage levels. Among the improvements, most interesting was the 2nm A20 processor and packaging enabling up to 40% higher sustained performance. The 48 MP main camera with variable aperture and significantly improved battery life (with faster charging) were the other notable improvements. Most interesting though was the price - up only $100 (or 7-8%) on entry 18 Pro and Pro Max models, which was less severe than feared and less than what we've seen from Android competitors. At higher storage tiers though the price increase was more substantial (with 18 Pro Max 2TB at $2,499 up $500 vs. comparable 17 Pro Max).

The well anticipated "Surprise" was the iPhone Duo - Apple's first foldable phone, which didn't disappoint. Unlike most competitor Android offerings, the Duo opens out to an aspect ratio similar to what we're used to with an iPad, which should make it more intuitive and useful for watching movies or have windows side by side. Starting price of $1,999 (for the 256GB option) was also lower than feared and considering this potentially replaces a high-end iPhone and an iPad (at $1000+ each), we believe this price is competitive, but ramps up to a whopping $3,199 for 2TB.

Apple is making steady progress on AI, with the potential to monetize. Apple Intelligence runs on-device whenever possible, with more computationally demanding requests are handled through Private Cloud Compute. Some capabilities that rely on the server models will have usage limits, with increased access available through iCloud+ plans - the first signs of AI monetization.

In addition to price increases on new models, Apple bucked its trend of discounting older models by $100 and actually increased prices of older models by $100 - effectively a $200 price move. This combined with the staggered launch should reduce gross margin impact from rising memory costs.

Our analysis shows that like for like 18 Pro / Pro Max models will have significantly worse gross margins than comparable 17 Pro / Pro Max models. Entry models will see over 1000bps of gross margin dilution, and on average 14% lower gross profit $/unit. However, the iPhone Duo, increased price of older models and staggered launch should reduce this gross margin impact.

While we like the new product releases and believe gross margin hit may not be as bad as feared, there continues to be much uncertainty on new level of gross margins with today's elevated memory prices. On the other-hand, these lower price increases on entry models should help Apple continue to gain market share over Android rivals. We rate Apple Outperform, PT $370, but worry that the stock may not work until December quarter guide is behind us (in late October).

Goldman analyst Michael Ng's first take:

During Apple's Special Event "Surprise and Shine" on September 9th, 2026, AAPL announced its new iPhone lineup (Foldable iPhone Duo, 18 Pro, and 18 Pro Max), updated Apple Watches (Series 12 and Ultra 4), and AirPods 5.

Overall, key product feature announcements (debut of a foldable form factor model, Touch ID to open on the iPhone Duo, new A20-series chips, and rear-camera systems) were largely as expected, and should drive continued strength in device demand.

Furthermore, AAPL's decision to bifurcate the iPhone 18 model launches with lower-end models expected (by us) in Spring 2027 should support continued iPhone ASP growth amidst ongoing device premiumization, further supported by explicit $100 price increases for the iPhone 18 Pro and 18 Pro Max and the addition of a new premium 2 TB storage option for the iPhone 18 Pro.

We view this favorable price/mix from premium products as supportive of upside to revenue, which should partially mitigate margin headwinds.

Importantly, Apple's new Apple Upgrade program & attractive carrier promotions (Free/$99 iPhone 18 Pro/Pro Max with eligible trade-in and plan) should support affordability against +$100 price increases. Additionally, as expected, AAPL announced new Apple Watch products (Apple Watch Series 12 and Ultra 4) and new AirPods 5. All iPhone 18 Pro and Pro Max models will be available for pre-order in over 63 countries and regions on Saturday, September 12th with availability beginning Friday, September 18th, while the iPhone Duo will be available for pre-order on Friday, October 16th with availability beginning Friday, October 23rd

Apple shares initially fell as Wednesday afternoon's launch event began around 1 p.m. ET, then reversed course and rallied 3% from the session low.

For new CEO John Ternus, the foldable iPhone's roughly $2,000 to $3,200 price tag sets up a major test of Apple's pricing power and ability to scale production. Strong demand could lift revenue and shift sales toward premium devices, but soaring memory costs coupled with modest price hikes could threaten margins, according to warnings on Wall Street desks. 

Secretary of State Marco Rubio kicked off his three-nation tour of Latin America on Tuesday, first meeting with Colombian President Abelardo de la Espriella. He will visit Ecuador and Peru later this week, supporting the Trump administration's increasing engagement with a growing bloc of right-leaning governments aligned with the US.

At their meeting in the coastal city of Barranquilla, de la Espriella said he and Rubio discussed security cooperation against drug trafficking, improved economic ties and an expanded role for Colombia in what he called "bulletproofing the hemisphere." He said Colombia would be an ally to the US on neighboring Venezuela.

El secretario de Estado Marco Rubio y el presidente Abelardo de la Espriella firmaron en Barranquilla acuerdos estratégicos de enorme peso: minerales críticos y cooperación nuclear civil.

Colombia deja de mirar hacia atrás y se sienta en la mesa grande. El Tigre no llegó a pedir… pic.twitter.com/NPcQvReZcc

— Jhonf Fonseca (@Jhonffonseca) September 9, 2026

"Colombia wants to newly consolidate itself as the principal hemispheric partner for the United States on security," said de la Espriella, who took office on August 7 after beating former socialist President Gustavo Petro.  

De la Espriella is among a new generation of right-wing leaders recently elected across South America, reflecting a once-in-a-generation political shift likely influenced by the Trump administration's effort to rid the West of socialist and Chinese influence.

Rubio said the White House hoped to restore cooperation and "perhaps to build upon it," adding, "And I think you have a president here now that is very interested in making that happen." 

SECRETARY RUBIO in COLOMBIA: Security is the basic and most important requirement of government, but prosperity follows closely behind it. pic.twitter.com/FsuPWEhjGA

— Department of State (@StateDept) September 8, 2026

Rubio's next stop on the tour is Ecuador and Peru, whose governments are also aligned with the Trump administration. 

SECRETARY RUBIO in COLOMBIA: Security is the basic and most important requirement of government, but prosperity follows closely behind it. pic.twitter.com/FsuPWEhjGA

— Department of State (@StateDept) September 8, 2026

Rubio's tour comes a little more than a week after President Trump secured the "biggest oil deal in history" with Venezuela, resulting in a major stake in more than 65 billion barrels of oil reserves. 

The oil fields are "going to generate royalties and revenues for the Venezuelan people, eventually through a democratically elected government, hopefully sooner rather than later, and directly benefit the people of Venezuela as opposed to going into the pocket of some, you know, corrupt government official or in the hands of American and Venezuelan adversaries," Rubio said.

Brazil holds its first-round presidential election on October 4. If needed, a presidential runoff can be held on October 25. Right-wing Senator Flávio Bolsonaro is narrowly ahead of President Luiz Inácio Lula da Silva in the latest polls, although those leads fall within the surveys' margins of error. Other polls show the two tied.

The election will determine the leadership and direction of the continent's largest economy. 

Traders are already positioning ahead of the Brazilian election, as we showed on Monday with an "explosive surge" in call open interest in the iShares MSCI Brazil ETF (EWZ).

And someone appears to be making a huge bet on just that: explosive surge in EWZ call OI https://t.co/nqFaGgms4R pic.twitter.com/uen9bXmqBw

— zerohedge (@zerohedge) September 8, 2026

Regional ETF outperformers include Peru, up 31%; Brazil, up 20.5%; and Latin America 40, up 19.9%.

These ETFs are beginning to attract buying interest heading into late summer.

Brazil's election is now a key focus for investors, with the iShares MSCI Brazil ETF (EWZ) gauging market positioning ahead of the vote.

In a relatively unusual turn around, US producer prices hit today ahead of tomorrow's CPI. Interestingly Consumer prices get all the headlines, it is PPI that offers the most read-throughs for Core PCE - The (old) Fed's favorite inflation gauge).

Headline producer pries were expected to rebound significantly from July's flatline as oil prices rebounded on re-escalations in the MidEast, and they printed right in line, up 04.% MoM in August (with July's revised up to +0.1% MoM. That lifted the annual PPI gain to +5.4% YoY (hotter than expected)...

Energy has flipped from deflation to re-inflation...

PPI final demand good rose 1.1% MoM, the most since May, while PPI final demand services rose 0.1%, the lowest since May.

Here are the details behind the breakdown:

Final demand goods: The index for final demand goods advanced 1.1% in August following two consecutive decreases.

• Over three-fourths of the broad-based rise can be attributed to prices for final demand energy, which moved up 4.2%.The indexes for final demand goods less foods and energy and for final demand foods increased 0.4% and 0.1%, respectively.

Product detail: Over a third of the August increase in the index for final demand goods can be traced to prices for diesel fuel, which jumped 24.1%. The indexes for gasoline, jet fuel, home heating oil, candy and nuts, and tobacco products also advanced. In contrast, prices for residential electric power fell 0.5 percent. The indexes for fresh sausage and for aluminum mill shapes also decreased.

Final demand services: The index for final demand services edged up 0.1 percent in August, the third consecutive increase.

• The August advance can be attributed to a 2.3-percent rise in prices for final demand transportation and warehousing services. Conversely, the index for final demand trade services moved down 0.2 percent, while prices for final demand services less trade, transportation, and warehousing were unchanged.

Product detail: Leading the August increase in the index for final demand services, prices for truck transportation of freight advanced 2.0 percent. The indexes for airline passenger services, legal services, hospital inpatient care, and automobiles retailing (partial) also rose. In contrast, margins for fuels and lubricants retailing decreased 11.3 percent. The indexes for health, beauty, and optical goods retailing; machinery and equipment wholesaling; and portfolio management also moved lower.

Core PPI (Ex Food and Energy) rose a cooler than expected 0.2% MoM (+0.3% MoM exp), and pulled Core producer prices up 4.6% YoY (as expected)...

Energy was the biggest driver with Transportation and Warehousing costs jumped while Trade costs deflated...

Portfolio management costs declined as stocks stagnated...

Higher crude, higher PPI Energy...

Fuel costs were the biggest driver within Energy/Commodities with over a third of the August increase in the index for final demand goods can be traced to prices for diesel fuel, which jumped 24.1%.

And that has lifted rate-hike odds for next week, now at 75%...

Will Warsh deliver another major surprise (not hike)? Just wait for tomorrow's CPI to print cool...

US stock futures slumped for a 3rd consecutive day, unable to find traction, and trading at session lows with tech underperforming as Treasury yields pushed higher keeping risk appetite firmly in check ahead of the latest print on US factory prices and earnings from Oracle. As of 8:15am ET, S&P futures are down 0.2%, with Nasdaq futures lagging, and down 0.5%. Pre-market, MegaCap Tech stocks are mixed, led by AAPL and META +1.0%. Overnight, TSMC reported a 53% increase in monthly sales amid strong AI infrastructure demand. Incremental macro news flow were largely muted since yesterday’s close: Trump promised $5k division if GOP wins the midterm, which sparked fresh fiscal stability concerns and pushed yields to fresh 3 year highs, as the 10Y tops 4.88%. The USD reversed an earlier drop to trade at session highs as the Yen slumps. Commodities are mixed: Oil higher (WTI +1.7%), while precious metals are lower; base metals and Ags are higher. US economic data slate includes weekly jobless claims and August PPI (8:30 a.m.) and August existing home sales and July wholesale inventories (10 a.m.). Fed speakers remain in external communications blackout period ahead of Sept. 15-16 FOMC meeting

In premarket trading, Mag 7 stocks are mixed but fading fast: Meta rises 1.3% as JPMorgan upgrades to overweight, citing upside potential after the social media giant launched its AI assistant (Apple +1.1%, Alphabet +0.2%, Microsoft little changed, Amazon -0.1%, Nvidia -0.5%, Tesla -0.7%

• Copper stocks are falling after Reuters reported that the White House has not ?yet made a decision on refined copper tariffs as it weighs concerns of higher prices raising manufacturing costs against the potential benefits of encouraging more domestic mining, citing two people familiar with the matter.
• AeroVironment (AVAV) rises 4% after the drone maker reported revenue for the first quarter that beat the average analyst estimate.
• American Eagle (AEO) falls 14% after the apparel firm’s second-quarter total comparable sales fell short of the average analyst estimate. Analysts note that strength at its aerie brand was more than offset by weakness at AE.
• Cooper (COO) tumbles 16% after the healthcare supplies maker cut its adjusted earnings-per-share and revenue guidance for the full year. Analysts note weakness in the firm’s CooperVision unit weighing on its sales forecast.
• JetBlue (JBLU) falls 2% after the airline cut its available seat miles forecast for the third quarter.
• Kinetik (KNTK) climbs 4% as the energy pipeline company partly owned by Blackstone is in the early stages of exploring options, including a sale, according to people familiar with the matter.
• Macy’s (M) slips 1% as investors weigh much better-than-expected comparable sales and adjusted EPS in the second quarter against a less robust third-quarter guidance.
• Navan (NAVN) slumps 15% after the software company gave an outlook that analysts said pointed to weaker trends in the second half of the year, despite overall solid growth.
• Rackspace Technology (RXT) climbs 13% after the company said it had joined the Nvidia Cloud Partner Program.

In other corporate news Citadel Securities told regulators that prediction market contracts linked to publicly-traded companies should be overseen by the SEC. Boring Co. secured $3 billion in fresh funding backed by the UAE, valuing Elon Musk’s tunneling startup at $23 billion.

Sentiment remains muted as inflationary signs grow: Brent is now trading above $103 (with Shanghai trading at $115!) as Iran vowed it was prepared for a more intense war, LME copper futures hit new records, and global tanker freight rates reached all-time highs.

Investors are also bracing for a busy calendar that could provide fresh catalysts for markets. The packed agenda comes after global yields climbed to the highest in years as the war in the Middle East pushed oil prices higher, prompting traders to bet on tighter monetary policy across the globe.

First up is the latest European Central Bank interest rate decision, with a hike already priced in and the focus instead on guidance. Earnings from Oracle Corp. will offer a fresh read on the outlook for artificial intelligence.  

Meanwhile, the August producer price index could offer clues on the course of inflation for the rest of the year and what it means for US rates. Today’s PPI number, followed by CPI on Friday, are key for market direction. With PPI components feeding directly into the Fed’s preferred inflation gauge and Fed’s Waller saying that the August data will heavily influence his decision, a hot print could materially reprice September rate-hike odds, currently at 61%. Stocks currently have greater sensitivity to bond yields, with S&P 500 equity risk premium relative to Treasury yields at lowest since 2002.

“Today’s PPI report matters, but probably not enough on its own to change the Fed’s decision next week,” said Santiago Mateo Yanguas at CaixaBank AM. “That said, a significant upside or downside surprise could still move markets today by shifting expectations for the rate path beyond the next meeting, particularly in Treasury yields and interest rate-sensitive sectors.”

Oracle reports after the US close with its shares down 17% this year, sharply underperforming tech peers as traders punished the firm over concerns about heavy capital spending and leverage. While cloud unit sales are projected to have more than doubled in the first fiscal quarter, recent market moves show that strong earnings aren’t always enough to win investors over. Separate figures from Adobe Inc. will offer another window into how software giants are navigating the challenge from AI.

“While quarterly results may trigger short-term volatility, we see the underlying earnings trend as the more important driver of long-term equity performance,” said Francisco Simon at Santander Asset Management. “The structural growth story remains intact, and that is ultimately what matters.”

Meanwhile, markets largely shrugged off President Donald Trump’s promise to give adult US citizens a $5,000 dividend if Republicans retain control of both houses of Congress.

“Markets appear to assign a very low probability to the measure becoming law, given the significant fiscal cost and the political hurdles it would face in Congress,” said CaixaBank’s Yanguas. “Unless the proposal gains tangible legislative support, investors are likely to treat it more as campaign rhetoric.”

Still, while Trump's offer was met with skepticism by the market, it adds to concerns about erratic policymaking at a time when Bessent is striving to keep yields down. Yesterday’s buyback announcement disappointed many who had expected more than the up to $6 billion announced: The “Treasury brought a pea shooter to a tank battle,” said Elias Haddad, Global Head of Markets Strategy at Brown Brothers Harriman.

Still, the ‘Trump dividend’ would cover the cost of a shiny new iPhone. Part of the sticker shock had been well flagged, with memory prices for smartphones surging as the AI buildout sucks up supply. Hyperscaler spending will be back in the spotlight after the close when Oracle reports — it’ll be a big test of market tolerance for AI spending given the company’s massive debt load.

There’s no signs of a slowdown in the AI buildout yet. TSMC posted the second fastest year-on-year monthly sales print for 2026, with the company struggling to meet overwhelming demand. Microsoft’s CFO said at an investor conference that Azure was supply constrained, while AI chipmakers in China are reportedly raising processor prices.

The upside in oil has also weighed on equities with the Stoxx 600 down 0.2% after erasing an earlier gain. European shares slipped for a third day ahead of an ECB meeting that’s expected to deliver an interest-rate increase and could offer clues on further policy tightening. Here are the biggest movers Thursday:

• FirstRand shares gained as much as 4.5%, the most since May, after the South African lender reported full-year results, which JPMorgan analysts said reflect “robust” momentum
• MP Evans Group gained as much as 6.5%, to the highest since May, after the Indonesian palm oil producer announced an acquisition of new land in Kota Bangun
• Genfit shares climbed as much as 12%, the most in over two months, after the biopharmaceutical firm outlined the commercial prospects for its non-invasive diagnostic test for MASH (metabolic dysfunction-associated steatohepatitis), sparking price-target upgrades
• D’Ieteren shares rose as much as 6.4%, the most in more than four months, after adjusted pretax profits rose in the first half
• Corbion advanced as much as 5.7%, to the highest since Feb. 2025, as Oddo BHF lifts its price target on the Dutch food ingredients firm to a joint Street-high
• AB Foods shares fell as much as 11%, the most since January, after the Primark owner reduced its profit guidance for the Sugar and Grocery divisions
• Genus shares fell as much as 9.8%, the most since February, after full-year revenue at the livestock breeding and genetics group missed analyst expectations
• Hemnet fell as much as 9.6%, the most since April, after the Swedish property listings platform announced it will pause its share buyback program of up to SEK600m in ordinary shares
• Fevertree Drinks fell as much as 6.5%, the most in more than a year, after the beverage company reported first-half earnings that came in shy of expectations

“We don’t think that the ECB would be more hawkish than current pricing,” noted Mohit Kumar at Jefferies. “We expect Lagarde to keep the future path of monetary policy data-dependent and not lean into a series of rate hikes.”

Asian stocks fell, tracking losses on Wall Street, as oil prices surged past $102 a barrel and intensified concerns that inflationary pressures would keep interest rates elevated. The MSCI Asia Pacific Index dropped as much as 1.3%, the most in a week, before paring some losses as chipmakers recovered from session lows. TSMC, Delta Electronics, Tencent and Alibaba were among the biggest drags on the gauge. South Korea’s Kospi closed down 0.3%, while most other benchmarks in Asia, including Taiwan and Hong Kong, traded lower. After being down much of the day, Japan’s Topix recovered and ended 0.2% higher, with Recruit Holdings contributing the most to the gains.  “Oil price fluctuations and the upside of some of the near-term escalations that we’ve seen have really been some of the key risks that market has to fathom as we head toward the the end of this year,” said Yuting Shao, senior director for global macro strategy at Manulife Investment Management. Earlier this week, MSCI’s Asia stock gauge approached near June’s record high as sectors beyond technology drove the rally. But renewed Middle East tensions have driven oil prices higher, with Brent crude holding gains after Iran said it was prepared for a more intense war with the US. 

In FX, the Bloomberg Dollar Spot Index is flat. The krone is the weakest of the G-10’s, falling 0.3% against the greenback.

In rates, the downside in Treasuries has pushed US 10-year yields up 3 bps to 4.87%, the highest since October 2023. Advancing energy prices weigh on Treasuries and front-end gilts, which have underperformed during London morning. With Treasury front-end yields about 1-2bp higher on the day and 10-year about 4bp higher near 4.855%, 2s10s and 5s30s spreads are about 2bp wider. Gilts lead the selloff in European government bonds with UK two-year borrowing costs rising to the highest since November 2023. US session highlights include August PPI data, 30-year bond auction and results of the 10- to 20-year buyback shortly after 2 p.m. New York time. 

WTI crude oil futures remain higher by about 1.7% after rising as much as 1.9%; Brent crude topped $102 a barrel amid signs US war on Iran will be protracted

Treasury auction cycle concludes with $22 billion 30-year bond reopening; Wednesday’s 10-year note auction drew strong demand as measured by its clearing yield 1.5bp lower than indicated by the WI level at the bidding deadline. WI 30-year yield near 5.31% is 9.4bp higher than last month’s new-issue auction result, a 0.4bp tail. IG dollar issuance slate includes Kommunalbanken 3-year offering; 16 borrowers priced $23 billion of US investment-grade bonds Wednesday, pushing two-day volume above $61 billion. Issuers paid about 4bps in new issue concessions on deals that were 3.1 times covered.

In commodities, Brent crude futures rise over 2% and above $103 for the first time since July with Iran ready for a more intense war. Oil prices did fall earlier in the session, providing a modicum of support to bonds after Wednesday’s selloff but that proved short lived.Spot silver falls 1% while gold is little changed.

US economic data slate includes weekly jobless claims and August PPI (8:30 a.m.) and August existing home sales and July wholesale inventories (10 a.m.). Fed speakers remain in external communications blackout period ahead of Sept. 15-16 FOMC meeting

Market Snapshot

Top Overnight News

• Trump on Wednesday suggested his Iran war might end after the mid-terms, but some of his top advisors warn it could last the duration of his presidency, potentially extending the conflict past Inauguration Day in January 2029. WSJ
• Donald Trump promised $5,000 for every US adult if Republicans retain Congress, which must be spent in the US and will cost well over $1 trillion. The move signaled mounting concern over affordability and fiscal discipline as voters sour on the economy and Iran war. BBG
• US Treasury Secretary Bessent touted tax cuts, job increases, trade rebalance and Trump accounts during his speech at the RNC Midterm Convention.
• Within weeks of Iran’s closure of the Strait of Hormuz, once Saudi Arabia’s primary export route for oil, the kingdom turned to Plan B: bypassing the strait by ramping up exports through pipelines to Red Sea. NYT
• The South Korean government is nearing the announcement of a major energy investment project in the U.S. to support America’s artificial-intelligence build-out, a long-awaited development of the trade deal struck between Washington and Seoul last year. The deal, potentially worth more than $100 billion, envisions South Korea financing the construction of up to eight nuclear power plants and a natural-gas project. WSJ
• The popularity of high-risk bets among investors looking to cash in on South Korea’s artificial-intelligence boom has caused concern at the central bank. A surge of investment in leveraged exchange-traded funds tied to tech titans such as Samsung Electronics and SK Hynix generated significant volatility in the domestic stock market, the Bank of Korea said, calling for stronger oversight and regulation of leveraged ETFs as they risk sowing instability. WSJ 
• The ECB is widely expected to raise rates for the second time since the Iran war sent energy prices soaring. The focus will be on signals from Christine Lagarde as markets see at least two more hikes. BBG
• The Bank of Japan may eventually be forced to raise interest rates rapidly if inflation accelerates given the country's loose financial conditions, board member Kazuyuki Masu said, warning of price risks ?that solidify the chance of a September hike. In a closely watched speech ahead of next week's policy meeting, Masu warned of broadening price pressures that have pushed underlying inflation "very close" to its 2% target. Reuters
• US PPI likely firmed in August after a renewed pickup in commodity prices. Consensus expects a 0.4% monthly increase. BBG
• TSM reported record monthly revenue for August on Thursday, as demand for chips used in artificial intelligence applications remained strong. The world’s largest contract chipmaker posted revenue of $514.8 billion New Taiwan dollars ($16.35 billion) for last month, up 53.3% from a year earlier and 10.1% from July. CNBC
• BofA Total Card Spending (w/e 5th Sept) +7.8% Y/Y (prev. +3.7% W/W). BofA said that the surge in spending growth was likely due to base effects from the shift in Labour Day timing and a rebound in gas prices.
• A US AI safety bill could be introduced next week, Semafor reported citing sources.
• A US Republican-led Senate subcommittee is investigating OpenAI's handling of the Hugging Face breach in July, Axios reported.
• S&P500 EPS growth in Q2 2026 was ~30% year / year excluding the "other income" related to some private investment stakes. Earnings for the hyperscalers and the AI infrastructure companies benefiting from their capex spending increased by 54% year / year in Q2, accounting for about 50% of S&P 500 EPS growth during the quarter. However, earnings growth for the rest of the market has also been strong and accelerating. Excluding the Energy sector profits that were boosted by higher oil prices, the rest of the S&P 500 posted year/year EPS growth of 14%: GS FICC

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mostly lower following the losses stateside, where all major indices declined as yields and oil prices climbed, with Brent crude topping USD 100/bbl for the first time since July. ASX 200 underperformed amid broad-based weakness across sectors and with the downside led by materials, mining, resources, and tech. Nikkei 225 was pressured alongside a higher yield environment and ongoing rate hike expectations, while BoJ board member Masu also stuck to the hawkish hymn sheet. KOSPI declined at the open but was off today's worst levels as SK Hynix rebounded from intraday lows. Hang Seng and Shanghai Comp conformed to the subdued mood across the region in the absence of bullish drivers and after the PBoC conducted open market operations, but at a paltry amount of CNY 3bln.

Top Asian News

• PBoC's Lu Lei said the Bank will refine the RRR framework and conduct open-market operations more flexibly and precisely.
• Japanese MOF Official Sato said the government is not considering buying back JGBs at this point.

European bourses are mixed, with Italy's and Spain's main indices (IBEX 35/FTSE MIB +0.2%) outperforming while the FTSE 100 (-0.4%) is the slight laggard. Light in terms of newsflow this Thursday morning, with focus being on US data (PPI on Thursday, CPI on Friday) and the ECB. Sectors point to a mixed picture. Autos top the sector pile, followed by Travel & Leisure and Insurance. To the downside is Tech, with Basic Resources and Construction rounding out the sector laggards.

Top European News

• German HICP Final (Aug MM) 0.2% vs. Exp. 0.2% (Prev. 0.9%).
• German HICP Final (Aug YY) 2.9% vs. Exp. 2.9% (Prev. 2.8%).
• Norwegian Core CPI (Aug YY) 3.0% vs. Exp. 3% (Prev. 2.7%).
• Norwegian Core CPI (Aug MM) -0.5% vs. Exp. -0.4% (Prev. 0.8%).
• Swedish GDP (Jul MM) -0.8% (Prev. -0.2%).
• Italian Industrial Production (Jul MM) 0.7% vs. Exp. 0.3% (Prev. -1.1%).
• Italian Industrial Production (Jul YY) 0.0% vs. Exp. -0.6% (Prev. -0.6%).
• Spanish Industrial Production (Jul YY) 2.3% (Prev. 1.1%); M/M 0.6% (exp. 0.2%).
• UK RICS House Price Balance (Aug) -28 vs Exp. -30 (Prev. -30, Rev. -29).

FX

• Snapshot: G10s are mixed against the flat USD. The Kiwi incrementally gains, whilst the JPY posts slight losses. Ultimately, price action has been sideways this morning, with focus on US PPI and the ECB later.
• DXY trades sideways and holds within a 98.70 to 98.82 range. There has been a lack of pertinent newsflow for the USD this morning, and it ultimately awaits US PPI this afternoon. There may be added focus on today’s report, with traders looking for any clues heading into the CPI report on Friday. Jobless Claims are also on the docket. Yields continue to trudge higher, as energy benchmarks remain above USD 100/bbl. However, as mentioned in yesterday's piece, the USD has largely ignored the higher yield environment. Much of this is likely due to the recent JPY strength, and also some fiscal-related fears creeping into markets. Moreover, markets will likely avoid making firm bets on the USD ahead of CPI (tomorrow) and the Fed next week.
• EUR trades within a 1.1629 to 1.1641 range, and holds near its 200-DMA at 1.1633. EUR action will be dictated by the ECB this afternoon, where the Bank is set to deliver a 25bps hike. Aside from the decision, focus will be on the updated staff projections (inflation to be upwardly revised), and any guidance for action later in the year. ING opines that President Lagarde could use her presser to push back on some of the markets’ hawkish bets, which currently price in another hike this year. However, the likelihood is that the President will reiterate her data-dependent and non-committal approach.
• JPY has been in focus for the past couple of weeks, with USD/JPY falling c. 4.5% since the start of the month. The pair is a bit more contained this morning, despite hawkish commentary from BoJ’s Masu, who stated that he expects to continue raising rates given current accommodative conditions. USD/JPY currently holds at the mid-point of a 153.28 to 153.74 range.

Fixed Income

• Despite a slightly firmer start for Bunds and USTs, as energy took a relative breather in late-APAC/early-European trade, fixed has reverted into the red and continues to falter as energy climbs once more with Brent above USD 102/bbl.
• USTs are once again below the 107-00 mark, and to an incremental WTD base of 106-29, which is also a contract low. Amidst this, yields are marginally firmer across the curve, with the 2yr to a 4.41% peak and the 10yr to 4.86%. Aside from the energy move, upside is a function of participants digesting commentary from President Trump at the RNC where he pledged a USD 5k dividend following a strong mid-term performance; while unlikely to occur, as it would need Congressional approval, the payment would cost in excess of USD 1tln and add further pressure to already strained public finances.
• Today, for the US, the docket is dominated by PPI and weekly claims. Note, the PPI release comes ahead of Friday’s CPI, which could well define the outcome of the September Fed. Thereafter, we look to supply and given, counterintuitively, the upside seen in yields on the Treasury buyback announcement on Wednesday, the 30yr tap today may garner extra attention. For reference, the 10yr (after the buyback announcement) was very strong, with the mentioned yield move beforehand potentially providing some additional concession into it.
• Bunds also lower, by just over 20 ticks at a 121.11 base, matching the low from Wednesday. Specifics for the region light, no move to final CPI earlier. Ahead, the docket is dominated by the ECB. A hike is widely expected, but the decision may not be a unanimous one. Additionally, we look for any deviation in the statement and/or Lagarde from the data-dependent, meeting-by-meeting approach, to a potential hawkish tilt given recent developments. On this, the 2027 & 2028 HICP forecasts will be key. However, recent moves in crude and TTF mean they are likely already somewhat stale and the expected upward revision to the forecasts is perhaps not sufficient. Something that may be elaborated on by Lagarde.
• The UK sells GBP 5bln 4.625% 2030 Treasury Gilt: b/c 3.24x, average yield 4.786%, tail 0.3bps.
• Italy sells EUR 7.75bln vs exp. EUR 6.5-7.75bln 3.00% 2029, 3.35% 2033 and 2.15% 2072 BTP.

Commodities

• WTI Oct and Brent Nov futures eke out mild gains, with prices continuing to be underpinned by the Middle Eastern situation, which shows no signs of abating. The former resides in a current USD 95.37-97.84/bbl range (vs yesterday’s 93.76-96.93/bbl range) whilst the latter trades in a USD 100.19-102.72/bbl range (vs yesterday’s 98.80-101.87/bbl parameter). Upside is somewhat capped by the delayed Private Inventory report, which showed a smaller draw than expected, with the DoE slated for today on account of Monday’s US holiday. Dutch TTF front-month has mounted EUR 80/MWh after finding an earlier base just above EUR 78/MWh, with prices continuing to be underpinned by Middle East supply woes alongside heating demand heading out of summer.
• Metals are subdued as higher energy prices keep the complex capped from a growth perspective, although participants await fresh drivers. Ahead, the ECB is unlikely to sway metals much, although US PPI could have an impact, particularly on precious metals. Spot gold resides in a narrow USD 4,388-4,435/oz range after finding support near yesterday’s USD 4,434/oz high. Note that yesterday, the bullion found support at its 100 DMA (today at 4,340/oz). 3M LME copper trades around record highs in a current USD 14,742.65- 14,870.78/t range.
• In terms of geopolitics, US President Trump said he thinks war with Iran will end immediately after the election and that they will win the war with Iran, while Iran said they are ready for a more intense war if required. Several explosions were heard yesterday in Iran's Qeshm and Sirik, while an oil tanker was reportedly being targeted in the Strait of Hormuz. Meanwhile, mediator Pakistan warned Iran to restrain Yemen’s Houthi militants after a rise in attacks on Saudi Arabia, while Houthis attacked Saudi cities with ballistic missiles and drones, and Saudi Arabia reportedly conducted airstrikes in Yemen. Pakistan's Foreign Minister said that there are no discussions right now regarding plans to act under the Makkah Defence Agreement, but when the time comes, they will act on the agreement.
• US Weekly Private Inventory Data (bbls): Crude -0.3mln (exp. -1.3mln), Gasoline -1.9mln (exp. -1.8mln), Distillate +2.0mln (exp. -0.2mln), Cushing -0.3mln.
• US Energy Secretary Wright said the current refining capacity is a bigger problem than crude oil supply.
• IEA's Birol said their new report shows global coal demand is now set to rise by 1.2% in 2026.
• Russia's Ryazan oil refinery (~350k BPD) has been idle since a September 6 drone attack, according to sources.
• Oman OSP for November-loading crude set at USD 119.30/bbl (prev. USD 87.84/bbl in October).
• Czech PM Babis said the EU should halt the ETS1 carbon allowances system and delay ETS2 due to the higher energy prices.

Trade/Tariffs

• US trade official said China is ramping up their purchases and is on track to fulfil farm purchases ahead of Chinese President Xi's Washington visit, according to SCMP. It was separately reported that China bought 1mln tons of US soybeans ahead of Xi's visit to the US, according to sources.
• The South Korean government is considering artificial intelligence investments as part of its trade agreement with the Trump administration, WSJ reported, with a deal that could potentially be worth in excess of USD 100bln.
• China's MOFCOM said China and the US are in consultations on arrangement for a USD 30bln reciprocal tariff cut framework, Xinhua reported.
• China is extending the anti-dumping probe into pecans from both Mexico and the US.

Central Banks

• BoJ Board Member Masu said one- to two-year real interest rates remain negative and that they need to keep the price trend from going above 2%, while he added that the BoJ is expected to continue raising interest rates given current accommodative financial conditions. Masu said Japan is no longer in deflation, so real interest rates should be moved out of negative territory as soon as possible, and noted that the policy rate is approaching the estimated neutral-rate range, so prices, employment and financial conditions must be monitored carefully. Furthermore, he said with Japan’s financial conditions still accommodative, the BoJ could be forced to raise rates rapidly if inflation accelerates, and that the BoJ must raise rates further and move its policy rate within the estimated neutral-rate range so it can conduct policy flexibly.
• In further comments, BoJ's Masu said underlying inflation is gradually approaching 2%, but currently does not expect it to rise substantially above that level. When asked about a 50bps hike, Masu said the bank should proceed cautiously with hikes. On the Yen, Masu stated that they will closely assess the yen’s appreciation and rising crude oil and global food prices at next week’s policy meeting. Masu added that they have emergency market operations as a tool, but that is only saved for exceptional moves in JGB markets.

Geopolitics: Middle East

• US President Trump said they will win the war with Iran and that oil prices will go down as soon as they win, while he suggested calling the Hormuz Strait the Trump Strait. Trump said 'may have to give them a shot at Pickaxe Mountain' and advised Iran not to get cute as the US would have to hit them very hard.
• Top White House advisers have raised privately with US President Trump the prospect that the Iran conflict could last through the remainder of his term, according to WSJ.
• CBS reporter Jennifer Jacobs noted that multiple US military aircraft suffered damage in strikes the prior night on the Salti Air Base in Jordan.
• Several explosions were heard in Iran's Qeshm and Sirik, with the sounds reportedly originating from the sea, according to Fars News Agency. Furthermore, IRNA cited official sources that stated areas in Sirik were hit by projectiles, although SNN reported that no points in Sirik have been targeted.
• Pakistan's Foreign Office spokesperson said the Makkah defence agreement is a defensive alliance focused on deterrence, with expansion not currently planned until its foundations are solidified. The Ministry added that there are no discussions right now regarding plans to act under the Makkah Defence Agreement but that when the time comes, they will act on the agreement.
• An Iranian lawmaker said Iran can take "special measures" in response to the IAEA's resolution and may consider action.

Geopolitics: Russia

• Russia's Defence Ministry said they struck Ukraine's Black Sea port of Chornomorsk and two ships near Odessa.
• Ukrainian President Zelensky said Ukrainian forces struck eight infrastructure targets supporting Russian military operations over the past 24 hours, including an oil refinery in Russia’s Yamalo-Nenets region and a seaport in Dagestan.
• Ukraine's Air Force said attack drones targeted Zaporozhzhia and that drone groups were headed to Dnipro and Kamienske.
• Poland’s Operational Command said military aviation remains active and ground-based air defense and radar systems are on alert due to potential threats to Polish airspace from Russian drone activity in western Ukraine.
• NATO allies have reportedly caught Russian submarines training to debut a secret weapon which could disable critical undersea cables, without leaving evidence, Reuters reported.

US Event Calendar

• 8:30 am: Sep 5 Initial Jobless Claims, est. 205k, prior 206k
• 8:30 am: Aug 29 Continuing Claims, est. 1780k, prior 1779k
• 8:30 am: Aug PPI Final Demand MoM, est. 0.4%, prior 0%
• 8:30 am: Aug PPI Ex Food and Energy MoM, est. 0.3%, prior 0.2%
• 8:30 am: Aug PPI Final Demand YoY, est. 5.3%, prior 4.7%
• 8:30 am: Aug PPI Ex Food and Energy YoY, est. 4.6%, prior 4.2%
• 10:00 am: Aug Existing Home Sales, est. 3.98m, prior 4.06m
• 10:00 am: Jul F Wholesale Inventories MoM, est. 1.3%, prior 1.3%

DB's Jim Reid concludes the overnight wrap

Markets had another eventful session yesterday, with stagflation fears mounting after Brent crude oil moved above $100/bbl for the first time since July. That was primarily driven by the latest strikes between the US and Iran, and the moves saw investors price in faster rate hikes and pushed bond yields to multi-year highs. On top of that, Treasuries saw further declines after the US Treasury Department confirmed they were buying back up to $6bn of longer-dated Treasuries, which fell short of some estimates. So by the close, that meant the 10yr Treasury yield (+5.2bps) hit a post-2023 high of 4.84%, whilst the 10yr bund yield (+7.6bps) hit a post-2011 high of 3.44%. And in turn, that pressured risk assets as well, with the STOXX 600 (-1.41%) posting its worst day in the last two months, whilst the S&P 500 (-0.48%) fell for a third day running. So even though we’re just over a week into September, it’s already living up to its reputation as one of the toughest months of the year for markets.  

As in recent days, the main catalyst for the oil move was the latest US-Iran strikes. So on Tuesday evening, we heard that the US had destroyed five Iranian tankers. And then as we went to press yesterday morning, Iran said they’d targeted 2 US vessels and 8 oil tankers in the Persian Gulf in retaliation. For investors, that news raised fears about a further escalation, and Bloomberg also reported that a senior Iranian official said Iran was ready for a more intense war if the US continued its attacks. So that raised doubts that the Strait of Hormuz would reopen soon, and there was a separate WSJ report overnight that White House advisers had privately raised the prospect with President Trump that the war could continue for the remainder of his term. So Brent crude (+3.36%) jumped to $101.21/bbl by the close, its highest level since May. And investors also moved to price in a more protracted period of high oil prices, with the 6-month Brent future (+1.55%) rising to its highest since early June, at $86.09/bbl.  

Whilst Brent crude rising above $100/bbl took up the main headlines, the inflation concerns were exacerbated by the latest moves in natural gas prices. In particular, European natural gas futures (+4.49%) closed at their highest level since 2022, at €79.25/MWh, and they even traded above €80/MWh at one point. That was partly driven by the US-Iran news, but prices took a further leg higher after the Governor of Russia’s Yamalo-Nenets autonomous district reported that there was a fire at an industrial site. That region is a major hub for Russian gas, and Ukraine said later that its drones had struck two gas condensate plants there. So the reports added to concerns about global gas supplies in the months ahead, particularly with the Strait of Hormuz still blocked.

With oil and gas prices still rising, that led to mounting speculation about faster rate hikes from central banks. So in the US, futures raised the probability of a September hike next week from 61% on Tuesday to 63% this morning. In part, that’s down to the inflationary impulse from energy, but the extent of the moves has also led to concerns about second-round effects, whereby inflation could broaden out away from energy. Meanwhile in Europe, investors also priced in a more hawkish path for the ECB, with an additional +9.0bps of hikes priced in by the June 2027 meeting, meaning that 86bps of further hikes are now priced by then. So that feeds into the concern we wrote about on Monday (link here), where several asset classes are vulnerable to the impact of building inflationary pressures and a faster tightening cycle from central banks.  

Those commodity moves put upward pressure on bond yields, but the rise then accelerated after the US Treasury Department announced they’d be purchasing up to $6bn of longer-dated Treasuries in their initial buyback operation. As a reminder, the Treasury delivered a surprise announcement in mid-August that they’d “at least double” the size of these operations, having previously planned to buy back $2bn before. But we didn’t know exactly how big that would end up being, so there was some uncertainty about how the market would react. But ultimately, the $6bn announcement saw yields rise across the curve, having fallen short of some estimates beforehand. So the 2yr yield (+3.7bps) ended the session at 4.43%, its highest since July 2024, and the 10yr yield (+5.2bps) moved up to 4.84%, the highest since October 2023. Meanwhile, the 30yr yield (+4.3bps) was up to 5.29%, still slightly beneath its recent closing peak of 5.31% on August 17.  

Over in Europe, there were even bigger moves in yields, given the continent’s greater exposure to higher energy prices. As a result, yields hit new multi-year highs across countries and maturities. For instance, the 2yr German yield (+7.2bps) rose to 3.06%, its highest since June 2024, whilst the 10yr bund yield (+7.6bps) hit another post-2011 high of 3.44%. Indeed, it now isn’t far away from the 2011 Euro Crisis peak of 3.49%, and if that’s exceeded, it would take yields up to levels not seen since 2009. Meanwhile in France, the 10yr OAT yield (+10.9bps) surged to a post-2008 high of 4.34%, and Italy’s 10yr BTP yield (+11.0bps) hit a post-2023 high of 4.29%. Here in the UK, there were fresh records too, with the 10yr yield (+8.9bps) at a post-2007 high of 5.26%, whilst the 30yr yield (+6.8bps) hit a post-1998 high of 5.87%.  

Looking forward, European rates will stay in the spotlight today, as we have the ECB’s latest policy decision at 13:15 London time. For the decision, they’re widely expected to deliver a 25bp rate hike today, taking their deposit rate up to 2.5%. So that would be the second rate hike of this cycle, following on from the initial hike back in June. But given that a rate hike is already priced in today, the focus will instead be on the path forward, including their latest economic forecasts. Our European economists think that there’ll be small upward revisions to the GDP projections for 2026 and 2027, along with higher headline inflation for 2027 and 2028. Otherwise, their view is that the ECB won’t give formal guidance today, and will instead repeat the “data dependent, meeting by meeting, no precommitment” mantra. For more details, see their full preview here.  

Ahead of all that, equities had a rough session yesterday, as the combination of geopolitical risk, higher energy prices and higher yields all weighed on the major indices. So in the US, that meant the S&P 500 (-0.48%) fell for a third day running. The breadth of the moves was even more negative, as the S&P saw 404 decliners, the most since June. Meanwhile, energy (+1.09%) was the only sector in the index to register an advance, up to a record high. Meanwhile in Europe, there were even bigger declines given the continent’s greater energy exposure, with the STOXX 600 (-1.41%) experiencing its worst session in two months, alongside bigger losses for the DAX (-1.66%) and the CAC 40 (-1.94%).  

Overnight, that weakness has continued in Asian markets, with further rises in bond yields. That includes Australia’s 10yr yield (+6.6bps), which is up to a post-2011 high of 5.27%, whilst Japan’s 10yr yield (+5.4bps) is up to 2.93%. Meanwhile for equities, the major indices have lost ground across the region, with the S&P/ASX 200 (-1.43%) and the Hang Seng (-1.29%) posting the biggest declines, alongside smaller falls for the Nikkei (-0.54%), the CSI 300 (-0.42%), the Shanghai Comp (-0.35%) and the KOSPI (-0.36%). Nevertheless, there have been signs of stabilisation overnight, with S&P 500 futures (+0.16%) pointing to a modest recovery after three consecutive declines for the index.  Finally, we also heard from the BoJ’s Masu overnight, who said that they’d “continue to raise the policy interest rate”, and that “What is most vital from now on is to ensure that the underlying inflation rate does not significantly exceed 2%.” So that cemented market expectations that the Bank of Japan would deliver another hike at their meeting next week.  

Looking at the day ahead, the main highlight will be the ECB’s policy decision, along with President Lagarde’s subsequent press conference. Otherwise, US data releases include PPI inflation for August, the weekly initial jobless claims, and existing home sales for August.

Brent crude futures traded above $102 a barrel Thursday morning after Iran threatened to intensify attacks, renewing concerns over tanker flows through the Hormuz maritime chokepoint. The supply risk extends well beyond crude to mounting shortages of refined products, particularly diesel, as the US diesel crack spread trades around $102 a barrel.

President Trump's indication yesterday that the conflict could continue beyond November's midterm elections suggests limited near-term fuel pump relief for working-class folks, with the US national gasoline average above the politically sensitive $4-a-gallon threshold and diesel at a record high. Trump also announced overnight a proposal for a $5,000 "Trump dividend" check for every American adult if Republicans retain control of both chambers of Congress.

Following Goldman, HSBC raised its 2026 average Brent crude forecast to $90 a barrel from $80, citing continued disruptions to shipping through the critical Gulf waterway that are expected to keep global oil balances tighter for longer.

With Hormuz flows running at roughly 30% of pre-conflict levels, HSBC analysts see the market adjusting to a prolonged period of depressed tanker transit through the chokepoint. That outlook suggests sustained supply constraints through year-end.

"The key indicator to watch is whether this will put an end to the heavy shuttling of oil through the Strait of Hormuz," said Arne Lohmann Rasmussen, chief analyst at Global Risk Management in Copenhagen. "It may not come to a complete halt, but combined with the more aggressive Houthis in the Red Sea and higher Chinese crude oil imports, the global oil market balance appears to be deteriorating again."

Earlier this week, Vitol Group CEO Russell Hardy said about 10 million barrels a day have been crossing the waterway, roughly half of pre-war levels. He added that an exact figure is hard to quantify and that volumes aren't guaranteed daily.

Read:

• "It's Pretty Tight": Vitol Chief Warns Of Global Fuel Squeeze As Refineries Max Out, Leaving Little Room For More Chaos

Goldman commodities strategist Yulia Zhestkova Grigsby sharply revised tanker-flow estimates through the Hormuz chokepoint to between 15 million and 16 million barrels per day, roughly two-thirds of pre-war levels. That's mainly because the market is not counting ships that turn off their automatic identification systems to avoid detection by Iran.

Goldman's Daan Struyven also noted one upside scenario this week that could push Brent to $120 if the conflict persists...

"The fundamental picture for products remains bullish with global inventories and reserves deteriorating," said Darrell Fletcher, managing director for commodities at Bannockburn Capital Markets. Before 'Operation Epic Furry', about a fifth of the world's oil and liquefied natural gas passed through Hormuz to global customers, mainly in Asia. The ongoing disruptions have sent NatGas prices in Europe above 81 euros on Thursday. 

Beyond energy, a broad-based commodity rally has pushed agricultural products and metals higher, sending the Bloomberg Commodity Index to levels last seen in 2012. HSBC analysts spot a commodities cycle developing into a "super squeeze," which suggests the move could be sustained.

London copper futures are trading north of $14,700 a ton, Brent crude futures have climbed above $101 a barrel, US diesel crack spreads are back in triple-digit territory, and the Bloomberg Commodity Index is at a 14-year high. The energy shock has broadened into a rally across the commodity complex, from energy to agricultural products to metals and other critical materials, with a growing number of Wall Street research desks identifying tightening physical supplies as a key driver.

HSBC chief economist for global commodities Paul Bloxham is the latest to warn that a "super-squeeze" in commodity markets continues to produce outsized gains.

"The 'super-squeeze' has continued to support elevated commodity prices … as the Iran and Russia-Ukraine wars and El Niño disrupt supplies … and AI and electrification drive demand," Bloxham wrote at the start of the note. "Prices are expected to remain elevated, and there are upside risks."

To illustrate the broad-based surge in commodity prices, the Bloomberg Commodity Index is now at levels last seen in 2012, marking a 14-year high...

... while the Quantix Commodity Index has hit a new record high.

Bloxham told clients to focus on these ten themes:

1) A'super-squeeze' continues …

Six months after the Middle East conflict began, it is still a key driver of commodity prices. Commodity prices are well above the pre-Iran war levels, despite being below the peaks reached early in the conflict. The worst-case possibilities have, so far, been avoided, largely because of rapid drawdown of inventories, but the global commodity price index is up 18% YTD and 24% y-o-y in August. The team's base case sees an average rise of 22% in 2026 (16% prior) and flat in 2027 (-7% prior), leaving our 2027 forecast 14% higher than previously expected. 

We see risks to these forecasts being to the upside as the 'super-squeeze' continues.

2) … with disruption from the Iran and Russia-Ukraine wars …

The Middle East conflict remains the key risk. The Strait of Hormuz remains largely closed, with significant uncertainties about when it will open and on what terms. A cycle of escalation and de-escalation of the conflict has been repeated many times in recent months, driving volatility. The Middle East conflict has also broadened, with attacks by the Houthis on Saudi ships in the Red Sea disrupting traffic though the Bab el-Mandeb Strait too. In addition, the Russia-Ukraine war, which is now in its fifth year, has been a more acutely disruptive force recently, including for supplies of grains and refined oil products, like diesel.

3) … and a strong El Niño weather event

Extreme weather is another upside risk to prices. A strong El Niño has arrived, with the Southern Oscillation Index already at extremes not reached in over two decades. This is a particular risk for agricultural supply, where the Middle East conflict has already disrupted fertiliser and diesel supplies and the Russia-Ukraine war has disrupted shipping. A recent Northern Hemisphere heatwave has also shifted patterns in energy consumption with implications for stocks of key energy commodities. El Niño is also affecting manufacturing supply chains, and thereby impacting commodity markets. 

4) Inventory rundown in focus, particularly for oil and gas

High inventories and rapid drawdown of these inventories - particularly of oil and gas - has been a key factor helping to, so far, balance markets in the face of the 'super-squeeze'. In the oil market, the US has been exporting more - as it runs down its strategic reserves - and China has been importing much less - as it too runs down reserves. However, the longer the disruptions continue, the greater the upside risk to prices, as stocks fall to levels that start to approach 'tank bottom'. For gas, European inventories are well below target, reflecting a very hot summer, with lower stocks increasing the risk of high prices in the coming winter.

5) More than just oil - sulphur, diesel and jet fuel disrupted too

The supply disruptions, particularly due to the Middle East conflict, extend well beyond oil and gas. In particular, there have been significant disruptions to supplies of sulphur, fertiliser, aluminium and helium -- as well as a range of refined oil byproducts, such as jet fuel, naphtha and diesel. The Russia-Ukraine war has more acutely affected supplies of products such as diesel, as the conflict has led to recent significant damage to refining capacity.

6) Metals and energy prices supported by AI and electrification

Most base metal prices have risen recently, as the boom in AI infrastructure investment and the energy transition have supported electrification demand. Copper prices have increased to all-time highs, partly reflecting strong demand, but also limited investment in new mines constraining supply and supply disruptions. For aluminium, although the Middle East conflict has been disruptive, China dominates global supply and some cargoes have cleared the Strait of Hormuz, containing the upside to prices. Lithium prices have also risen strongly over the past year, up 130%, but as with previous cycles, this has triggered more supply, particularly from Zimbabwe and Australia, which could curb the price upside.

7) China's slowdown weighs on bulk commodities

Despite good support for base metals from the AI and electrification booms, falling fixed asset investment in China, particularly the ongoing property correction, which is now in its fifth year, has weighed on demand for iron ore, coking coal and steel. That being said, this year China's authorities announced more infrastructure investment plans, worth around RMB7 trillion, as part of the 'Six Networks' initiative, which should support demand for bulk commodities and their prices. For iron ore, on the supply side, there have been large changes to pricing as the China Mineral Resources Group (CMRG) centralised Chinese buying and the ramp-up in production from the Simandou mine in Guinea adds in more supply.

8) Grains and 'finer foods' prices rise, as supply squeezed

Agricultural markets have been heavily affected by the disruptive impacts of the Middle East and Russia-Ukraine wars, particularly to supplies of fertilisers and diesel. The El Niño event, Northern hemisphere heatwave and record high ocean temperatures (a positive Indian dipole) are all risks to the outlook for supplies. An El Niño event creates more volatility in agricultural prices, by disrupting supply. Winners are typically North and South America, with much of Asia typically worse off, with higher drought risk in Australia and Indonesia, a weaker monsoon in India and hotter and drier conditions in South-East Asia. Grains prices have been rising recently, led by wheat, and 'finer foods' prices are rising too - particularly cocoa and coffee.

9) Precious metal prices are high and we see more upside

After a significant rise in precious metals prices through 2025 - gold prices more than doubled to their peak in January 2026 - prices have edged lower across the precious metals complex year-to-date in 2026. A key driver has been a rise in interest rates - particularly at the long-end of yield curves - which has encouraged investors to seek yield and thus move away from precious metals. That being said, with geopolitical risk still high, central bank demand still positive, and more uncertainty in bond markets, precious metals prices are well supported. Platinum and palladium prices may also be supported by constrained mine supply.

10) COCCLES suggests a 'super-bull' phase underway

Finally, HSBC's purely statistical model, COCCLES, which looks for patterns in commodity prices, shows that the market is convincingly in a 'super-bull' phase of the cycle.

This model is not structural, but it does tend to be the case that once a super-bull phase begins, it tends to persist much longer than the other phases do. 

This model result lends statistical support to the view that commodity prices will remain elevated. 

With HSBC's commodity-cycle model firmly signaling a "super-bull" phase, the big question for traders now is how long physical scarcity themes and other supply constraints can collide with demand to sustain the rally.