Morning Brew September 11 2026

Good morning.

Today’s US CPI release at 14:30 is the last major data point before next week’s Fed meeting and will likely determine whether Treasury yields finally break through the psychologically important 5% level. After yesterday’s sharp bond selloff, the US 10-year yield finished at 4.95%,

The consensus expects headline CPI at 3.4% and core inflation at 2.4

Middle East tensions escalated further overnight after reports that Iran-aligned Houthi forces expanded control along Yemen’s Red Sea coastline, including strategic islands near the Bab el-Mandeb Strait. The development raises concerns that Iran could potentially exert influence over a second critical maritime chokepoint alongside the Strait of Hormuz. Markets immediately translated this into higher energy risk premiums and renewed fears that oil-driven inflation could remain elevated for longer.

That concern was already reinforced by yesterday’s US Producer Price Index. Producer prices rose 0.4% month-on-month in August, the strongest increase in three months, pushing annual PPI inflation to 5.4%, slightly above expectations. A 24% surge in diesel prices together with higher gasoline and jet fuel costs highlighted how quickly energy is once again feeding through the inflation pipeline. Core PPI remained relatively contained, rising 0.2% on the month and 4.6% year-on-year, but the market’s focus was firmly on energy and transportation costs.

Japan provided little comfort overnight. Producer prices rose 7.6% year-on-year in August, remaining well above expectations and underlining that global pricing pressures have not disappeared. Although monthly figures showed the first decline in a year, the broader message remains one of persistent cost pressures across industrial supply chains.

Equity markets struggled accordingly. The S&P 500 lost 0.6%, marking a fourth consecutive decline and closing at its lowest level since the end of July. The Nasdaq 100 fell 1.1%, while the Dow Jones shed 316 points. Materials and mining stocks were the weakest performers as copper prices experienced another day of extreme volatility. Reports that the White House has yet to decide on refined copper tariffs sparked heavy selling across the sector after copper had earlier reached another record high.

Technology provided a few brighter spots. Apple rallied more than 3% following positive analyst commentary. After the close, Oracle surged roughly 4% after delivering strong earnings and exceptional cloud infrastructure growth of more than 120% year-on-year. Adobe also exceeded expectations, supported by accelerating demand for AI-driven products and rapidly expanding recurring revenues.

European equities were unable to escape the risk-off environment. The Stoxx 600 fell for a third consecutive session while Germany’s DAX, France’s CAC 40 and the FTSE 100 all moved lower. Rising oil prices and a still-hawkish ECB continued to pressure sentiment. Shipping and energy-related names remained among the few beneficiaries as higher freight rates and supply disruption risks supported the sector.

The commodity complex remains the market’s central focus. Brent crude briefly traded above USD 107 before extending gains toward USD 110 in late US trading, levels not seen since May. WTI jumped almost 7% to around USD 103. The combination of Middle East tensions, disrupted shipping routes and lower Saudi production has created a powerful bullish backdrop. European natural gas prices have also surged to multi-year highs, adding to broader energy inflation concerns.

Meanwhile, gold and silver came under pressure as rising real yields outweighed safe-haven demand. Higher bond yields remain the dominant force across asset classes.

In fixed income, the move was brutal. Two-year Treasury yields jumped 15 basis points to 4.58%, their highest level since 2024. Ten-year yields rose 11 basis points to 4.95%, leaving investors staring directly at the 5% threshold. Thirty-year yields reached 5.37%, the highest level since 2007. The scale of the move reflects a market that is increasingly worried that inflation, particularly energy-driven inflation, will prove more persistent than central banks anticipated.

The key question now is simple: will today’s CPI report be the catalyst that pushes US 10-year yields through 5%?

A print in line with expectations may trigger some relief, particularly after the aggressive bond selloff of the past few sessions. However, any upside surprise in either headline or core inflation would arrive at a moment when investors are already nervous about oil, geopolitics and the potential for renewed inflationary pressures. Under those circumstances, a break above 5% appears entirely plausible.

Markets will therefore focus on two variables today: the CPI release itself and any further developments from the Middle East. Either one has the potential to generate significant volatility. The White House will also be in focus, as President Trump is unlikely to welcome another sharp rise in Treasury yields ahead of next week’s Fed meeting.

Today could be one of those sessions ….

Friday, 11 September 2026
Macro: UK GDP; U.S. CPI; preliminary University of Michigan consumer sentiment.
Central banks / speakers: No major central-bank decision scheduled.
Corporate earnings: No major global large-cap focus.

Monday, 14 September 2026
Macro: Canada CPI;

Tuesday, 15 September 2026
Macro: China industrial production and retail sales; UK labour-market data; Germany ZEW economic sentiment;
Corporate earnings: Trip.com.

Wednesday, 16 September 2026
Macro: US Rate Decision UK CPI; U.S. retail sales and PPI.
Central banks / speakers: Federal Reserve rate decision, economic projections and press conference.
Corporate earnings: Lennar.

Thursday, 17 September 2026
Macro: U.S. housing starts, building permits and initial jobless claims.
Central banks / speakers: Bank of England rate decision; Bank of Japan meeting begins.

Friday, 18 September 2026
Macro: UK retail sales; U.S. industrial production and capacity utilisation.