GGMA Markets Briefing: Oil Jumps on Saudi Pipeline Shutdown and AI Warnings Hit Chips as Three Central Banks Meet
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Good morning,
I hope all is well.
Here is a brief summary of today’s Markets Briefing:
· Oil jumped after Saudi Arabia shut its East-West pipeline following drone attacks, removing the route that has bypassed the Strait of Hormuz, while the planned Iran-Gulf meeting on a temporary shipping lane was postponed.
· Goldman Sachs and JPMorgan both switched to calling a Fed hike this week after August inflation came in firm, and futures now price it as close to a done deal.
· Chip and AI shares fell across Asia after the heads of Anthropic and OpenAI called for slower development of advanced models and OpenAI confirmed it will not list this year.
· The yen held near a seven-month high before Friday's Bank of Japan decision, with speculators net long the currency for the first time since February and a quarter-point move all but priced.
· The oil surge has revived the debate over a Bank of England rise this year, with consensus still expecting a divided hold on Thursday and a slower pace of balance-sheet run-off.
· Sweden's election is too close to call, with the left-wing bloc narrowly ahead and counting due to resume on Wednesday.
Today's Macro Roadmap: Canadian inflation at 14:30 CET. Schnabel, Cipollone and Lagarde all speak. The Fed decides Wednesday, the Bank of England Thursday, the Bank of Japan Friday.
Full Article:
GGMA Markets Briefing: Oil Jumps on Saudi Pipeline Shutdown and AI Warnings Hit Chips as Three Central Banks Meet
Oil rose after Saudi Arabia shut its East-West pipeline following drone attacks, while Asian equities fell after the heads of the largest artificial-intelligence companies called for a slowdown in the development of advanced models (BBG) (BBG). WTI rose 2.41% to $102.46 and Brent 2.23% to $106.94 (BBG). Bloomberg reports that Brent rose as much as 3.7% before paring the gain, that Saudi Arabia halted the line as a precaution after attacks the previous day with no indication of when it restarts, and that Iraq's Prime Minister Ali Al-Zaidi ordered an investigation after finding the strikes came from a region bordering Iran (BBG). Reuters reports that the pipeline has carried about 4 million barrels a day, roughly 4% of global supply, to the Red Sea port of Yanbu, that Yanbu holds five to seven days of export cover, and that repair estimates from its sources range from a partial restart during works to five or six weeks (Reuters). Brent's prompt spread widened sharply in backwardation from a week earlier, and the International Energy Agency said on Friday that world oil supply will fall by 5.7 million barrels a day this year (BBG) (Reuters).
In stocks, MSCI's emerging-market index fell 1.83% to 1,698.5, and the Nikkei declined 1.00% to 63,320 as Korean chipmakers and SoftBank Group led the decline, while the Hang Seng rose 0.49% to 24,920 and the ASX rose 0.17% to 8,744 (BBG). Bloomberg reports that Samsung Electronics and SK Hynix each fell more than 4% in Seoul and SoftBank more than 13%, its biggest intraday drop since late June, after OpenAI's Sam Altman confirmed the company will not list this year (BBG) (BBG). Anthropic Chief Executive Dario Amodei argued in an essay on Saturday that development of the most advanced systems must be slowed to prevent catastrophic harm, and Altman and xAI's Elon Musk endorsed it, with Amodei promising third-party evaluators with employee-level access (BBG). "These two companies and their plans have a pretty huge ripple effect on all of tech," said Mark Mahaney, an analyst at Evercore ISI, who does not expect a material slowdown in spending (BBG). Bloomberg writes that SoftBank's credit default swaps widened to the highest since 30 March and that its investment in OpenAI is set to reach close to $65 billion by October (BBG). Bloomberg says that market watchers expect the pressure on chipmakers and their supply chains to prove short-lived while demand for chips, energy and computing power outstrips supply, with Billy Leung of Global X arguing that pacing extends the development timeline and helps the shift from building infrastructure to earning from it, and that the Nasdaq 100 is already more than 4% below its June record while a US chip gauge has slumped 14% and Asian technology stocks have fallen almost 8% (Deccanchronicle). Nasdaq futures fell 1.34% to 28,993.25, S&P 500 futures 0.57% to 7,616, Euro Stoxx 50 futures 0.36% to 6,304, and the CSI 300 slipped 0.54% to 4,478, while FTSE futures rose 0.17% to 10,673.5 (BBG) (BBG).
Regarding the Federal Reserve, Goldman Sachs abandoned its call for a hold and now expects a quarter-point increase at Wednesday's meeting, while JPMorgan forecasts increases in both September and December and raised its estimate of the long-run policy rate, both moving after August consumer and producer prices came in above expectations (Reuters). "We think that the FOMC will be reluctant to surprise," Goldman economist David Mericle said (Reuters). The Financial Times reports that annual consumer price inflation held at 3.4% in August, showing none of the improvement Chair Kevin Warsh said he would need to avoid a move, and that National Economic Council director Kevin Hassett said the president would not be happy with an increase, while President Trump repeated on Sunday that the United States should have the lowest interest rate in the world (FT). Regarding the Bank of England, the Financial Times reports that market consensus is for a six-three vote to hold on Thursday, that participants expect the annual quantitative-tightening target to slow from £70 billion to £50 billion, and that Akshay Singal, global head of short-term interest rate trading at Citi, sees a real risk of a five-four split or even a surprise increase (FT). Regarding the European Central Bank, President Christine Lagarde told Ouest-France that the current shock is longer-lasting and that the bank is obliged to react, and Bundesbank President Joachim Nagel said on Friday that rates may need to move into mildly restrictive territory (BBG). Regarding the Bank of Japan, conference notes released on Monday quote Executive Director Koji Nakamura saying that frequent supply shocks should not be treated as transitory because they can lift underlying inflation, and that Japan has seen non-linear reactions of domestic prices to import-price and exchange-rate shocks (Reuters). For the Fed, markets price an 86.7% probability of a 25 basis point rate hike on Wednesday, and 49 basis points cumulatively by December. For the Bank of Japan, markets price a 98.0% probability of a 25 basis point rate hike on Friday, and 47 basis points cumulatively by December. For the Bank of England, markets price a 19.1% probability of a rate hike on Thursday, 91.0% at the November meeting, and 43 basis points cumulatively by December. For the ECB, markets price a 76.2% probability of a rate hike in October, and 37 basis points cumulatively by December. For the RBA, markets price a 58% probability of a rate hike on 29 September, and 38 basis points cumulatively by December. For the Bank of Canada, markets price a 68.5% probability of a rate hike in October, and 39 basis points cumulatively by December. For the RBNZ, markets price a 59.8% probability of a rate hike in October, and 37 basis points cumulatively by December.
In currencies, the dollar index rose 0.20% to 99.319 and the yen weakened 0.30% to 154.07 per dollar, holding near the seven-month high it reached last week (Reuters). Reuters reports that speculators turned net long the yen for the first time since February, that MUFG considers a quarter-point Bank of Japan increase almost fully priced and sees further yen strength as dependent on a signal that the faster pace continues, and that TD Securities warns dollar-yen could snap sharply higher if no further move is put on the table for October or December (Reuters). Commonwealth Bank of Australia said Warsh must match his rhetoric with action or risk further undermining his credibility (Reuters). The euro eased 0.26% to 1.1569 and sterling 0.14% to 1.3505, while the Australian dollar fell 0.29% to 0.7148 and the New Zealand dollar 0.46% to 0.5788 (BBG) (Reuters). The Swedish krona weakened 0.34% against the dollar to 9.7332 with the election too close to call, the left-wing bloc narrowly ahead with more than 90% of ballots processed and counting due to resume on Wednesday (BBC).
In government bonds, the Treasury ten-year yield was steady at 4.96%, and the two-year eased 1.6 basis points to 4.61%, after the two-year rose 26 basis points last week (BBG). Bloomberg reports that the ten-year reached 4.97% by the end of last week, close to the October 2023 peak and a level it has not closed above since 2007, and that Treasury Secretary Scott Bessent's attempt to restrain yields with larger buybacks underwhelmed investors (BBG). Ian Lyngen, head of US rates strategy at BMO Capital Markets, expects the ten-year to breach 5% in very short order, Grace Peters of JPMorgan Chase Private Bank said yields a little above 5% would cause indigestion in the equity market. Ed Al-Hussainy of Columbia Threadneedle said the long-end selloff could become much more disorderly if the Fed does not move (BBG). The Japanese ten-year yield rose 1.1 basis points to 3.00% before Friday's decision (BBG). Thirty-year gilt yields came close to 6% last week, a level not crossed since 1998, and some investors expect the Bank of England to slow or pause long-dated sales in response (FT).
In commodities, copper fell 1.25% to 493.51 and the industrial metals index 0.83% to 176.665 as firmer rate-hike expectations lifted the dollar (Reuters). Gold eased 0.36% to $4,333.57 and the precious metals index 0.88% to 445.3347 (BBG). Bloomberg reports that a planned meeting between Iran and several Gulf nations on a temporary shipping lane through the Strait of Hormuz was postponed, with Oman's foreign minister Badr Albusaidi citing the interests of consensus and Bahrain having already ruled out attending (BBG). US Energy Secretary Chris Wright played down the chances of a deal and estimated that transit and bypass pipelines together leave flows at about two-thirds of pre-war levels (BBG). Reuters reports that the Houthi capture of Yemen's Red Sea coastline, including islands near Bab el-Mandeb, gives the group leverage over a second shipping artery, and that flows through the Strait of Hormuz have slowed to between 6 million and 9 million barrels a day from a Middle East total of about 22 million before the war (Reuters). The Wall Street Journal reports that President Trump told Ukraine to stop striking Russian diesel production, that Russia's refineries processed 3.8 million barrels a day in August against 5 million a year earlier according to Energy Aspects, and that US diesel topped $6 a gallon on Friday for the first time (WSJ).
In other news, this article caught my eye: "China's Economy Enters Critical Phase Determining 2026 Stimulus" (BBG). Economists surveyed by Bloomberg expect Tuesday's August data to show industrial production rebounding to 4.8% from a year earlier while fixed-asset investment falls 7.1% year to date and retail sales rise just 0.8%, with passenger vehicle sales already down 24% in August (BBG).
Data and the day ahead: New Zealand's Performance of Services Index rose to 51.2 in August from 50.6, a second month of expansion, and net migration rose to 3,010 in July after a June figure revised up to 2,580 from 1,610 (LS). Japan's final industrial production for July was revised to a decline of 0.2% on the month from a preliminary gain of 0.1%, with the annual rate at 3.9%, and capacity utilisation rose 0.5% after 4.1% (LS). Still to come: Swedish final inflation at 08:00 CET, Swiss producer and import prices at 08:30 CET, Swiss sight deposits at 10:00 CET and Canadian inflation at 14:30 CET, where consensus looks for the annual rate to hold at 3.0% (LS). European Central Bank Executive Board member Isabel Schnabel speaks in Berlin at 11:15 CET, Piero Cipollone in Brussels at 15:00 CET and President Christine Lagarde in Vienna at 17:15 CET, while the Federal Reserve is in its blackout before Wednesday's decision (LS). The Federal Reserve decides on Wednesday with new projections, the Bank of England on Thursday and the Bank of Japan on Friday, and Chinese activity data and the UK labour report land on Tuesday (LS).
Time Stamp: 14 September 2026, 07:54 CET