Daily Market Outlook, August 13, 2026

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Missive - CPI Relief Buys Time, Not Victory

Global equities are pushing back toward record highs after a calmer US inflation report gave markets more confidence that the Fed can stay on hold in September. Bonds extended gains, technology stocks led the advance in Asia, and Brent crude finally paused after a six-day rally. The near-term message is constructive: softer payrolls and a benign CPI print have bought the Fed breathing space. The deeper question is whether that breathing space is enough when financial conditions still look loose and the economy does not appear to have much spare capacity.

The MSCI All Country World Index rose 0.1%, moving closer to its all-time intraday high from last week. The MSCI Asia Pacific index gained 1%, helped by another strong performance from technology shares, while European futures point to a firmer open. In the US, the S&P 500 finished just short of a record close, as traders cut the implied probability of a September Fed hike to around 35%. The market reaction is straightforward: July CPI did not deliver the trigger hawks needed.

Treasuries continued to rally after the inflation data, with yields lower across the curve. The policy-sensitive two-year yield fell 2bps to 4.18%, reflecting reduced near-term tightening expectations. Bonds in Australia and New Zealand also gained, following the US lead. Even so, the longer end remains under pressure from a less comforting mix of persistent inflation risk and rising fiscal supply. Thursday’s 30-year Treasury auction is expected to price at the highest financing rate in 25 years, after this week’s $42bn 10-year sale drew the highest yield since 2007. That keeps the market’s relief somewhat front-end focused: the Fed may be able to wait, but term premium and deficit concerns have not disappeared.

Brent crude slipped 0.2% to $88.75/bbl, snapping a six-day winning streak. The dip helps the post-CPI mood, but oil remains high enough to keep inflation sensitivity alive. The Strait of Hormuz risk premium has not gone away, and energy prices remain a potential obstacle to a clean disinflation story if they feed through to gasoline prices and inflation expectations. Gold briefly touched a two-month high, supported by lower rate expectations, before giving back those gains.

In FX, the yen firmed 0.1% to around 159.25 per dollar. Prime Minister Takaichi’s government signalled support for a possible near-term Bank of Japan rate hike, with markets now watching September or October as plausible windows for action. The yen remains close to levels that keep intervention risk live, but the more durable support would come from a credible narrowing in policy differentials. Until then, the currency’s rallies remain vulnerable to reversal.

The US inflation report gives the Fed room to procrastinate. July CPI was broadly in line, but markets are likely to view it as confirming the deceleration seen in June. Combined with the soft July payrolls report, it is hard to see a September hike being delivered from here. The hawks’ concerns have not gone away, but the trigger for immediate action is lacking. With the mid-term elections approaching and Warsh’s Task Forces likely to take time before delivering policy recommendations, the path of least resistance is for the Fed to extend its wait-and-see stance, potentially through to the final meeting of the year. The three hawkish dissents at the last FOMC still matter, but they do not yet look enough to force action without stronger inflation evidence.

That said, the underlying macro picture is less dovish than the market reaction suggests. It remains difficult to argue that the US economy has enough slack to generate renewed disinflation. It is also hard to make the case that monetary policy is meaningfully restrictive across the economy. Wealth effects are supporting consumption, the AI buildout is driving investment, and financial conditions look easy rather than tight. Input prices are still rising, inventories remain a concern, and the labour market is sending mixed supply-side signals: the unemployment rate is falling alongside labour participation, despite weak monthly jobs prints. That looks more like reduced labour supply than a clean cooling in demand.

This is the key tension. Near-term inflation data has improved enough to delay Fed action, but the broader economy still looks tight enough to keep medium-term inflation risks alive. The Fed may get lucky if commodity prices stabilise, goods disinflation persists and rent pressures continue to ease. But that is not the same as policy having conclusively restored price stability. For now, markets can celebrate the absence of a September hike trigger. The risk is that easy financial conditions and resilient demand make the next inflation scare harder to dismiss.

The UK delivered a modest upside surprise this morning, with GDP expanding 0.4% q/q in Q2, above the Bank of England’s July Monetary Policy Report forecast of 0.3%. The composition was encouraging, with private consumption and investment accounting for essentially all the expansion. Measured government output contracted 0.3% q/q, although the ONS noted this was likely affected by school closures during heatwaves. Market-sector GDP outpaced overall GDP, which is notable given that it has often struggled to do so in recent quarters. The contribution from core parts of the public sector also remains below trend.

The monthly profile through Q2 was on an upward trajectory, meaning that even if output is flat at the June level throughout Q3, arithmetic alone would deliver Q3 growth of around 0.2% q/q. That is already slightly above the BoE’s July forecast of 0.1%. In other words, the hurdle for the UK economy to outperform BoE projections is low. For policymakers, this adds nuance: activity is not booming, but it is holding up better than expected, which limits the urgency to ease while inflation risks remain sticky.

Macro to Micro: markets got the CPI outcome they needed. Global stocks are near records, bonds are rallying, and September Fed hike risk has faded. But this is relief, not resolution. Oil remains elevated, financial conditions look easy, and the US economy still lacks obvious spare capacity. The Fed can justify waiting, but it cannot yet claim victory.

Overnight Headlines

US-China ‘Board Of Investment’ Stalls Before Expected Trump-Xi Meeting
Japan’s Producer Price Gains Stay High As BoJ Mulls Rate Path
Japan PM’s Populist Tax Cut Draws Pushback From Ruling Party
Australia Central Banker Says Rate Risks Are Skewed Higher
New Zealand Two-Year Inflation Expectations Cool To 2.34% In Q3
Hormuz Ship Traffic Near Three-Month Low As US-Iran Deal In Doubt
Rio Tinto Gets $1.8B Bailout For Australia’s Biggest Aluminium Smelter
Shein Is Said To Consider Aug 28 For Hong Kong Trading Debut
Anthropic Said In Talks To Buy AI Startup Decart For $6B
Cerebras Raises Annual Targets On Strong AI Chip Demand
Cisco Beats On Sales Outlook, Citing ‘Broad-Based’ Record Demand

FX Options Expiries For 10am New York Cut

(1BLN+ represents larger expiries and is more magnetic when trading within the daily ATR.)

EUR/USD: 1.1620 (EU938m), 1.1605 (EU601m), 1.1600 (EU2.9bn), 1.1575 (EU987m), 1.1560 (EU963m), 1.1550 (EU1.5bn), 1.1545 (EU694m), 1.1540 (EU953m), 1.1525 (EU536m), 1.1520 (EU825m), 1.1515 (EU1.1bn), 1.1500 (EU1.8bn), 1.1465 (EU518m), 1.1450 (EU509m), 1.1415 (EU1.6bn), 1.1405 (EU551m), 1.1400 (EU816m)
USD/JPY: 160.00 ($976m), 159.00 ($1.6bn), 158.50 ($623m), 158.25 ($737m), 158.00 ($735m)
GBP/USD: 1.3515 (GBP559m), 1.3380 (GBP996m)
USD/CHF: 0.8100 ($1.3bn)
AUD/USD: 0.7000 (AUD874m)

CFTC Positions as of 7/7/26

Equity fund speculators raised their net short position in the S&P 500 CME by 32,299 contracts to a total of 319,577. Meanwhile, equity fund managers reduced their net long position by 2,008 contracts to 937,107.
Speculators also increased their net short positions in CBOT US 5-year Treasury futures by 179,319 contracts (totaling 1,325,719) and in CBOT US 10-year Treasury futures by 103,124 contracts (totaling 979,243). Conversely, they decreased their net short positions in CBOT US 2-year Treasury futures by 120,346 contracts (to 1,004,228), in CBOT US UltraBond Treasury futures by 5,723 contracts (to 314,985), and in CBOT US Treasury bonds futures by 41,225 contracts (to 176,272).
Bitcoin's net long position stands at 3,752 contracts.
The Swiss franc has a net short position of -32,822 contracts, the British pound -57,814 contracts, the euro -58,091 contracts, and the Japanese yen -45,473 contracts.

Technical & Trade Views

SP500 - 7620 weekly bull/bear level

Daily VWAP Bullish
Weekly VWAP Bullish
Above 7620 Target 7870
Below 7600 Target 7485

DXY - 99 weekly bull/bear level

Daily VWAP Bullish
Weekly VWAP Bearish
Above 99 Target 98
Below 99 Target 100

EURUSD - 1.1550 weekly bull/bear level

Daily VWAP Bearish
Weekly VWAP Bullish
Above 1.1550 Target 1.17
Below 1.1480 Target 1.1420

GBPUSD - 1.3450 weekly bull/bear level

Daily VWAP Bullish>Bearish
Weekly VWAP Bullish
Above 1.3450 Target 1.3690
Below 1.34 Target 1.33

USDJPY - 160 weekly bull bear level

Daily VWAP Bullish
Weekly VWAP Bearish
Above 155 Target 160
Below 155 Target 152

XAUUSD - 4170 weekly bull bear level

Daily VWAP Bullish
Weekly VWAP Bullish
Above 4170 Target 4400
Below 3940 Target 3570

BTCUSD - 64k weekly bull bear level

Daily VWAP Bearish
Weekly VWAP Bullish>Bearish
Above 64k Target 71k
Below 61k Target 52.2k