Several Claims that an Interim Deal To Open Hormuz Could Be Imminent
August 5, 2026
On the heels of yesterday’s record U.S. equity market closes, financial markets are feeling optimistic. Axios reports that a 60-day deal that would open the Strait of Hormuz involving the U.S., Oman and Iran is very close. Sources in Qatar claim that a draft has been written, and both President Trump and his Treasury Secretary, Scott Bessent, said a formal announcement could come as soon as today. West Texas Intermediate crude oil had been as low as $74.39/barrel overnight versus around $85 at the end of last week but currently shows a net rise of 0.7% so far today.
Lessening safe-haven support has softened the dollar, which so far today is down 0.2% against the euro and sterling and 0.1% versus the yen, Swiss franc and both Canadian and Australian dollars. Bigger retreats have been made against the South Korean won and Mexican peso, and a rise of 0.8% has been experienced relative to the New Zealand dollar.
Asian equities closed up 3.8% in South Korea, 3.4% in Japan, 2.9% in Taiwan, and 1.5% in China. Smaller upticks in Europe are led by a 0.5% rise in the Spanish IBEX, and both the S&P 500 and DOW in futures trading are also 0.5% stronger.
The Japanese 10-year JGB yield fell back three basis points, while counterparts in the United States, U.K., France, Italy and Spain are a basis point lower.
Silver (+3.5%) and gold (+2.5%) have attracted keen interest.
In U.S. domestic news, the closely watched Democratic Party senate primary in Michigan produced a very close vote, with the more progressive candidate holding a very narrow lead. And ADP’s July estimate of private sector employment resulted in an unexpected drop of 44k.
As had been expected, the 5.25% repo rate was held steady by officials at the Reserve Bank of India. It’s been at that level since a 25-basis point cut last December. The rate had crested at 6.50% from March 2023 until an initial cut in February 2024.The explanation of today’s decision opined
Even though headline inflation is projected to increase, it is primarily on account of supply side pressures caused by food and fuel; it is not getting broad-based; core inflation remains moderate and is expected to decline after peaking in Q3. Growth, albeit resilient, is expected to be lower in 2026-27. The outlook, however, is hazy because of the uncertainties regarding south-west monsoon, El Niño, geopolitics and global trade policy. There is a need for greater clarity to emerge, especially regarding inflation, its path and composition before taking any policy action. Any such action would also have to consider the need for recalibration of policy rates in line with the evolving growth-inflation dynamics, especially the normalization of the underlying inflation from its benign levels seen hitherto.
Today’s data menu has been dominated by a slew of composite and service sector purchasing manager surveys done in July:
- Euroland’s composite and service readings were revised higher to 8- and 5-month highs of 52.0 and 51.7. If maintained, those levels suggest third quarter growth of about 0.3% versus 2Q. July composite scores among the four largest euro area economies range from France’s 3-month low of 49.4 up to Spain’s 19-month high of 56.5.
- The final British readings — a composite 3-month high of 52.2 and a services 8-month high of 52.1, were also a bit better than its preliminary estimates.
- Although comfortably above the 50 neutral threshold, India’s composite PMI of 54.3 was nearly 3 points below June’s reading and at a 52-month low. The services PMI of 53.3 constituted a 53-month low.
- Australian PMI readings of 53.2 overall and 53.6 for services were both at six-month highs.
- Although revised lower, Japan’s composite PMI of 52.7 was at a 3-month high even tough the services index slipped to a 2-month low of 51.2.
- China’s composite and service PMI readings of only 50.8 and 50.4 depict sluggish growth and represent the lowest scores in 19 and 22 months, respectively.
- Russia’s composite and services PMIs (a 5-month high of 49.6 and a 3-month high of 49.0) depict slower rates of contraction.
- Swedish composite and service PMIsslid to 2-month lows of 54.7 and 54.2, levels that still connote robust growth.
- Canada’s manufacturing PMI rose half oa point to a 49-month high of 53.5.
- Hong Kong’s private sector PMI fell a point to a 10-month low of 51.0.
- Singapore’s manufacturing PMI of 51.4 was at a 92-month high.
- The non-oil United Arab Emirates’ PMI rose to a 4-month high of 52.7, and Lebanon’s private PMI stayed above 50 at a 5-month high of 50.7.
- The South African private PMI edged down 0.2 to a 2-month low of 50.3.
A characteristic of many of the above surveys was lessening inflationary pressure.
In addition, Euroland’s release of producer price data from June showed a 0.3% monthly decline and a retreat from the 38-month year-on-year high of 5.9% recorded in May to a 3-month low 4.6%.
Armenian consumer price inflation retreated to 4.5% in July from 5.1% the month before. Serbian producer price inflation dropped to 6.2% in July, a 4-month low, from 7.0% in June, and Filipino consumer price inflation of 6.2% last month was down from 7.2% in April.
French industrial production experience its third straight stagnant month in June, an uptick of 09.1% after -o.1% in May and +0.1% in April.
U.S. mortgage applications fell for the fourth time in the last five weeks. The drop of 2.9% brought the cumulative decline over the full five weeks to 11.9%. U.S. motor vehicle sales declined 1.4% last month.
Just in: The U.S. S&P Global-compiled composite and service sector purchasing manager indices depict accelerating growth to an even larger extent than estimated earlier. The readings were 2.6 and 3.4 points higher than in June at 54.5 and 54.6. The overall score was at a 9-month high. The ISM-compiled non-manufacturing purchasing managers index edged 0.1 point further above the 50 breakeven threshold to 54.1. This steadiness masks big and opposing shifts in the sub-indices for employment (3.8 points lower at 47.4) and inflationary pressure (2.6 points more elevated with a reading of 70.3). With the Fed prioritizing price stability restoration over employment maximization at the moment and in the event that all other policy considerations holding unchanged, these results would strengthen the case for tightening policy and doing such sooner rather than later.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: Euroland PPI, July 2026 composite purchasing manager indices, Reserve Bank of India
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