Bitunix Analyst: The Fed minutes and the PMI take the stage, with the Strait of Hormuz situation driving oil prices and global risk appetite
On August 17, the market this week will look ahead to the Fed’s July meeting minutes, the August PMI, and earnings reports from retail giants such as Walmart and Target. Recent U.S. data on CPI, PPI, and retail sales have been weaker than expected, and pricing for a Fed rate hike in September has eased to around 27%. Goldman Sachs also believes a September hike is “very unlikely,” and near-term rate pressure has somewhat eased. However, the FOMC minutes still need to be watched for officials’ stance on inflation and energy prices. If the minutes deliver a more hawkish signal, rate expectations could be repriced again.
On the other hand, whether the Strait of Hormuz can truly restore commercial shipping will directly affect oil prices and inflation expectations. According to reports, Iran and Oman have made progress on shipping routes, but actual vessel traffic remains far below normal levels. As a result, it is still a diplomatic development rather than a supply-risk being resolved. If shipping continues to recover, the risk premium in crude oil could decline; conversely, if negotiations stall or maritime tensions escalate, oil prices rising again would add to global inflation and interest-rate pressure.
Meanwhile, U.S. equities remain at elevated levels, but there are signs of localized weakness on the U.S. consumer side. This week, earnings from Walmart, Target, Home Depot, and others will further test consumer resilience. The biggest contradiction in the market today is that corporate earnings remain strong, yet high oil prices, cooling employment, and rising living costs are squeezing some consumers’ spending capacity. If consumption holds up, AI and strong corporate earnings can still support U.S. stock valuations; if consumption deteriorates further, the market will reassess the sustainability of corporate earnings and lofty valuations.
Overall, the core of this week’s market is not a single expectation of rate hikes or cuts, but whether declining monetary policy pressure can offset the capital-cost pressures created by energy prices, fiscal financing, and long-end interest rates. The FOMC minutes, PMI, retail earnings, and Hormuz shipping conditions will jointly determine how much risk assets can withstand in an environment of high valuations.
On August 17, the market this week will look ahead to the Fed’s July meeting minutes, the August PMI, and earnings reports from retail giants such as Walmart and Target. Recent U.S. data on CPI, PPI, and retail sales have been weaker than expected, and pricing for a Fed rate hike in September has eased to around 27%. Goldman Sachs also believes a September hike is “very unlikely,” and near-term rate pressure has somewhat eased. However, the FOMC minutes still need to be watched for officials’ stance on inflation and energy prices. If the minutes deliver a more hawkish signal, rate expectations could be repriced again.
On the other hand, whether the Strait of Hormuz can truly restore commercial shipping will directly affect oil prices and inflation expectations. According to reports, Iran and Oman have made progress on shipping routes, but actual vessel traffic remains far below normal levels. As a result, it is still a diplomatic development rather than a supply-risk being resolved. If shipping continues to recover, the risk premium in crude oil could decline; conversely, if negotiations stall or maritime tensions escalate, oil prices rising again would add to global inflation and interest-rate pressure.
Meanwhile, U.S. equities remain at elevated levels, but there are signs of localized weakness on the U.S. consumer side. This week, earnings from Walmart, Target, Home Depot, and others will further test consumer resilience. The biggest contradiction in the market today is that corporate earnings remain strong, yet high oil prices, cooling employment, and rising living costs are squeezing some consumers’ spending capacity. If consumption holds up, AI and strong corporate earnings can still support U.S. stock valuations; if consumption deteriorates further, the market will reassess the sustainability of corporate earnings and lofty valuations.
Overall, the core of this week’s market is not a single expectation of rate hikes or cuts, but whether declining monetary policy pressure can offset the capital-cost pressures created by energy prices, fiscal financing, and long-end interest rates. The FOMC minutes, PMI, retail earnings, and Hormuz shipping conditions will jointly determine how much risk assets can withstand in an environment of high valuations.