Unsure About Hormuz Talks but Not Expecting U.S. CPI Data to Be an Immediate Problem
August 12, 2026
Investors expect U.S. July overall and core consumer price inflation to dip marginally. Comments from Fed officials have suggested that an interest rate hike could happen at September’s meeting, but today’s CPI isn’t expected to seal that vote. If that in fact proves the case, attention will quickly turn to tomorrow’s producer price releases. Meanwhile, confidence has been also buoyed by recent corporate earnings reports. The fate of negotiations to open the Strait of Hormuz remains highly unclear. The price of oil bounced around overnight and remains close to $83/barrel in the case of West Texas Intermediate.
Guarded optimism regarding today’s CPI report is reflected in ten-year sovereign debt yields. Those in the United States, Germany and Great Britain have slipped two basis points, while a 3-basis point decline has occurred in France, Italy and Spain. Swiss and Aussie yields are one basis point lower. The outlier has been in Japan where the 10-year JGB opened four basis points higher following yesterday’s Mountain Day closure.
Overnight movements in the dollar were inconsequential, and the weighted DXY dollar gauge is unchanged from Tuesday’s close.
Equity markets earlier today rose 3.7% in South Korea, 1.7% in Indonesia, and 0.8% in Japan. The German DAX and Nasdaq futures are currently up by 0.4% and 0.6%. Share prices in the U.K., France, and Italy are treading water.
Bitcoin, gold and silver show price gains of 0.7-1.0% currently.
In Germany and Portugal, July CPI inflation measurements were left unchanged from preliminary estimates of 2.8% and 3.0%, respectively. German inflation, which had been as low as 1.6% in September 2024, was up from 2.3% in June and its highest since April. After bottoming at 1.4% in December 2024 and later at 1.9% this past January, had soared to 3.4% in April on elevated energy costs.
Romanian consumer price inflation low point of 4.6% was touched in September 2024. That year-on-year pace more than doubled to a 37-month high of 10.9% in May and more subsequently settled back to 10.4% in June and 8.2% last month. Like Germany and Portugal, the traced pattern of Romanian inflation has been dominated by the highly volatile energy component.
In India, consumer price inflation has failed to recede. Rather, prices in July jumped monthly by another 0.9%, raising their 12-month rate of increase to a 19-month high of 4.45%, which is closer to the peak of 7.79% in April 2022 than to the low of 0.25% visited in October 2025.
Year-on-year growth in Japanese machine tool orders of 50.4% in July was almost as elevated as the 52.8% leap in June and remained well above the 35.7% increase experienced on average during the first half of 2026.
Just in: U.S. consumer price data from July aligned very closely with expectations, showing a percentage point slowdown in the energy component to 4-month low of 14.7%, a tenth percentage points overall drop to a 4-month low of 3.4%, unchanged food price inflation of 3.0%, and a 0.1 percentage point dip to a core inflation rate of 5-month low of 2.5%. The closely watched trends in shelter costs and services fell to 3.3% and 3.2%. Without an element of surprise, the data have elicited a lower 10-year Treasury yield, now four basis points below yesterday’s close, and European yields have declined further as well. The dollar strengthened against the yen but lost some ground against the euro and sterling. A separate U.S. data report out today revealed a partial 3.6% rebound in mortgage applications last week following a combined 9% slide in the two prior weeks.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: German and Portuguese CPI, India CPI, U.S. consumer prices
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