TMGM Daily Market Breakfast: 11 September 2026

Morning Snapshot

• The European Central Bank raised its deposit rate by 25 basis points to 2.50%, lifting its main refinancing rate to 2.65% and marginal lending rate to 2.90%, while warning that inflation risks remain tilted to the upside and growth risks to the downside.
• Oil prices surged as Middle East supply risks intensified, with WTI breaking above $100 to as high as $103.86 and Brent nearing $110 amid threats to Red Sea and Strait of Hormuz shipping.
• U.S. producer prices rose 5.4% year on year in August, above the 5.3% consensus and up from a revised 4.8%, reinforcing expectations for a Federal Reserve rate increase at next week’s FOMC meeting.
• Markets turned to the U.S. August CPI report due at 12:30 GMT, with core CPI forecast at 0.2% month on month as investors reassessed the Fed’s September decision after the stronger PPI reading.
• UK GDP rose 0.4% month on month in July, beating expectations for no growth and following a 0.3% increase in June.
• Reuters reported that the Bank of Japan is set to raise interest rates by 25 basis points at its September 18 policy meeting, with hawkish messaging helping keep tightening expectations elevated.
• Asian stocks fell sharply after Wall Street losses as surging energy prices and a global bond selloff added to inflation concerns.
• The Financial Times reported that Iran and Gulf states are preparing to meet on a temporary arrangement to manage shipping through the Strait of Hormuz.
• Copper reached a fresh nominal record and a 15-year high in real terms as AI-related power demand, tariff-driven stockpiling and supply disruptions tightened the market.

Market Developments

Energy

WTI rose above $100 per barrel for the first time since May 2026 and traded as high as $103.86 after earlier lows of $95.37, while Brent neared $110 as Middle East supply risks escalated. WTI was also reported around $99 during Thursday trading and was up about 10.50% for the week at one stage.

Foreign Exchange

The euro slipped back below 1.1600 against the U.S. dollar after the ECB’s rate increase, while EUR/USD was also reported near 1.1610 earlier in Asia. Sterling rose to near 1.3518 after stronger UK GDP data, AUD/USD traded around 0.7155 to 0.7159 after a 0.80% Thursday loss, USD/CHF climbed to around 0.8140, and EUR/JPY moved above 179.00 with the euro up 0.40% against the yen.

Equities

Asian stocks declined sharply on Friday, tracking the overnight fall on Wall Street, as higher oil prices and a global bond selloff weighed on risk sentiment.

Precious Metals

Gold fell about 0.90% on Thursday after the stronger U.S. PPI report and higher oil prices pushed yields higher, then held firm on Friday as Treasury yields and oil pulled back from recent highs ahead of the U.S. CPI release.

Macroeconomics & Central Banks

ECB Raises Rates by 25 Basis Points and Keeps Tightening Bias in Focus

The European Central Bank raised its Deposit Facility Rate to 2.50%, its main refinancing rate to 2.65% and its marginal lending facility to 2.90%, with the new rates taking effect on September 16. President Christine Lagarde described the move as a “no-brainer” and said the Governing Council would remain data-dependent, meeting by meeting, without pre-committing to a specific rate path.

Updated staff projections showed headline inflation averaging 3.0% in 2026, 2.5% in 2027 and 2.1% in 2028, with the 2027 and 2028 forecasts revised higher. Inflation excluding energy and food was projected at 2.5% in 2026, 2.6% in 2027 and 2.3% in 2028, leaving core inflation above target throughout the forecast horizon.

Lagarde said the euro area economy had been more resilient than expected, supported by consumption, public investment and a recovery in services, while manufacturing remained solid and the labour market robust even as employment growth slowed. At the same time, the ECB warned that higher energy prices could feed through to core inflation and food costs, and that a worsening conflict, supply disruptions or an unusually cold winter could lift gas prices further. Reuters also reported that sources see further tightening as likely in the months ahead, with the possibility of another move as soon as October.

Hotter U.S. Producer Prices Lift Focus on August CPI and Next Week’s Fed Decision

U.S. producer prices rose 5.4% in August from a year earlier, above the 5.3% consensus and up from a revised 4.8% in July, according to Bureau of Labor Statistics data. The stronger reading added to the global bond selloff and reinforced market pricing for a Federal Reserve rate increase at next week’s FOMC meeting.

MUFG said around 18 basis points of tightening were priced into next week’s meeting, up from 13 basis points at the end of last week. The report noted that components feeding into the PCE deflator were firmer than expected, with healthcare costs up 0.3% month on month and airfares up 3.2% month on month.

Attention then shifted to the August CPI report due at 12:30 GMT on Friday. Core CPI was forecast at 0.2% month on month, with the release seen as central to near-term U.S. rate expectations after the hotter PPI print and renewed energy-price pressure.

UK Economy Expands 0.4% in July, Beating Expectations

UK gross domestic product rose 0.4% month on month in July, ahead of expectations for a flat reading, after a 0.3% increase in June, according to Office for National Statistics data. The stronger-than-expected reading supported sterling and pointed to firmer near-term momentum in the British economy.

The data was strong enough to lift GBP/USD to near 1.3518 in one market reaction report, while the euro retreated against the pound after the release. The figures arrived as investors continued to weigh the implications of higher global energy prices and tighter monetary policy across major economies.

Reuters Says Bank of Japan Is Set to Raise Rates Next Week

Reuters reported that the Bank of Japan is set to raise interest rates by 25 basis points at its September 18 policy meeting, citing sources. Separate market reports said the BoJ’s recent messaging has been unequivocally hawkish, with a quarter-point increase widely anticipated and close to fully priced.

Expectations for a BoJ move were also supported by Japan’s producer-price backdrop and by official commentary pointing to further normalization. The prospect of a BoJ increase next week has kept the yen in focus even as the U.S. dollar remained supported by stronger U.S. inflation data and higher Fed tightening expectations.

Geopolitics, Energy & Commodities

Oil Surges Above $100 as Red Sea and Hormuz Risks Deepen Supply Fears

Oil prices jumped sharply as conflict-related supply risks across the Middle East intensified. WTI rose more than 7% and broke above the $100-per-barrel mark for the first time since May 2026, trading as high as $103.86 after bouncing from lows of $95.37. Brent approached $110 as markets repriced the scale and duration of the disruption risk.

Reports highlighted threats to shipping around the Bab al-Mandeb Strait after Houthi advances near strategic areas and the Red Sea port of Mokha, alongside continued concern over flows through the Strait of Hormuz. While meaningful volumes were still moving through Hormuz, flows were reported to remain well below pre-war levels, underscoring the fragility of regional supply routes.

Additional supply-side pressure came from Saudi Arabia’s August production data reported to OPEC, which showed output at 6.24 million barrels per day, the lowest level since the 1990s. ING also cited stronger Chinese crude buying, with independent refiners running at almost 63%, up from 45% in July, while U.S. commercial crude inventories fell by 391,000 barrels last week and total inventories, after accounting for Strategic Petroleum Reserve releases, declined by 1.64 million barrels.

The International Energy Agency was cited as saying global oil markets tightened sharply in August. World oil demand is now forecast to decline by 2.5 million barrels per day in 2026, 940,000 barrels per day deeper than last month’s outlook, while global oil production fell 1.6 million barrels per day month on month to 100.1 million barrels per day in August, with more than 10 million barrels per day of Gulf output still shut in.

Iran and Gulf States Prepare Shipping Talks on Strait of Hormuz

Iran and Gulf states are set to hold a meeting aimed at securing support for a temporary arrangement to manage shipping through the Strait of Hormuz, the Financial Times reported. The talks come as the waterway remains central to global energy-market concerns and as oil traders monitor the risk of further disruption to regional exports.

The reported meeting adds a diplomatic track to a market already focused on reduced flows through Hormuz and mounting threats to Red Sea shipping. The development was closely watched because of the strait’s importance to crude and refined-product transport.

Copper Hits Fresh Record as AI Demand and Supply Constraints Tighten the Market

Copper reached a fresh nominal record and a 15-year high in real terms, supported by AI-related data-centre construction, electricity-grid expansion, tariff-driven stockpiling and supply disruptions. National Bank of Canada said the metal is nearing its 2011 peak in constant dollar terms and is close to its highest real price since the mid-1970s.

The report also highlighted a less direct link to Middle East disruption through sulphur markets. Shipments through the Strait of Hormuz have been severely curtailed, pushing sulphur prices to more than double their level at the start of the year, a development that matters because sulphuric acid is used in some copper-processing methods.

Higher copper prices were described as raising the cost of power grids, AI infrastructure and broader electrification projects at a time when geopolitical fragmentation is making supply less reliable.

Market Developments

Asian Stocks Slide as Oil Shock and Bond Selloff Weigh on Risk Sentiment

Asian equities fell sharply on Friday, following overnight losses on Wall Street, as surging oil prices and a global bond selloff heightened inflation concerns. The decline reflected broader pressure on risk assets as investors reassessed the outlook for central-bank tightening in the United States and elsewhere.

The move came against a backdrop of higher energy costs, stronger U.S. producer-price data and rising expectations for policy tightening by both the Federal Reserve and the Bank of Japan.

Upcoming Key Events

• U.S. August Consumer Price Index — 12:30 GMT: The Bureau of Labor Statistics is due to publish August CPI data, with core CPI forecast at 0.2% month on month and the release in focus ahead of next week’s FOMC meeting.
• Bank of Japan Policy Meeting — null: The Bank of Japan is scheduled to hold its policy meeting on September 18, with Reuters reporting that sources expect a 25 basis point rate increase.