Oil prices rose by nearly 1 percent today after Iran and the US attacked tankers in the Strait of Hormuz, Reuters reported, quoted by BTA.
The Brent variety from the North Sea, which is a reference for Europe, added 0.97 percent to $ 97.21 per barrel as of 10:30 Bulgarian time.
The US light crude oil WTI is up by 0.64 percent to $ 92.05 per barrel.
Last week, Brent rose by 7.8 percent, and the American benchmark by nearly 10 percent, after Iran and the United States resumed attacks and caused a reduction in the transportation of the raw material through the Strait of Hormuz, through which before the war nearly a fifth of the oil for the world market passed.
Inflation is once again at the forefront of global financial markets this week, after the new rise in oil prices and strong data on the US labor market changed expectations for monetary policy. Investors will mainly monitor consumer and producer prices in the US, the meeting of the European Central Bank (ECB), signals from the “Bank of Japan“ and data on trade and inflation in China.
In addition to monetary policy, geopolitics is also being added. The new escalation between the United States and Iran in the Strait of Hormuz has pushed up oil prices and triggered a sell-off in government bonds from the United States to Japan and Europe. This creates an increasingly uncomfortable combination for central banks: inflation is accelerating again, while economic growth in many countries remains weak.
And it is precisely the relationship between oil, yields and stock prices that is likely to remain the main theme for investors. “To simplify my view of the short-term trading environment, US stocks move inversely to oil prices and government bond yields“, say analysts at “Charles Schwab“.
The price of US light crude oil (WTI) has risen by about 9 percent in the past week, and October futures are trading around $91 a barrel. “Commerzbank“ (Commerzbank) reports that Brent crude reached $95 a barrel, while natural gas in Europe rose to a three-year high of over €70 per megawatt-hour. In the US, diesel prices hit a four-year high, and Charles Schwab says retail prices briefly hit a record $5.85 a gallon.
The effect quickly rippled through bond markets. The yield on 10-year US Treasuries hit about 4.8 percent, its highest level since late 2023, and ActiveTrades says (ActivTrades) at one point it rose to 4.798 percent, the highest level since January 2025. The yield on ten-year Japanese bonds reached 3 percent for the first time since 1996, British bonds with the same maturity rose to a 19-year peak of 5.294 percent, and German bonds approached 3.4 percent for the first time since 2011.
According to “Commerzbank“, it is yield that is increasingly becoming a competitor to stocks. “US government bonds with a yield of 4.8 percent for ten-year and 5.3 percent for thirty-year securities are becoming increasingly strong competition for investments in stocks“, the bank's analysts point out.
Wall Street expects inflation
After the decline on Friday, the broad S&P 500 index still ended the week with a slight increase and remained only about 1 percent below its historical peak from mid-August. Since the beginning of the year, the index has grown by nearly 13 percent.
Behind the relatively calm weekly change, however, lies significantly greater volatility. Markets have been moving from concerns about a renewed acceleration in inflation and rising yields to hopes that the Federal Reserve may hold off on tightening monetary policy.
The next test will be producer price data on Thursday and consumer prices on Friday. Economists polled by Reuters expect the overall consumer price index to rise 0.4 percent in August from July, and the core index, which excludes food and energy, to rise 0.2 percent.
“The CPI is definitely going to move one way or the other... so a lot depends on that report,” said Sid Vaidya, chief investment strategist at TD Wealth. According to him, the representatives of the Federal Reserve "have emphasized their commitment to price stability in recent months and at some point this rhetoric will have to be backed up by action if inflation does not show sufficient progress."
A similar assessment was made by Garrett Melson, portfolio strategist at Natixis Investment Managers Solutions. In light of the upcoming data, "what really matters is whether this number actually confirms the slowdown that we saw in June and July," he said. "In that sense, it all comes down to one number."
The importance of inflation indicators increased after unexpectedly strong employment data. The US economy created 162,000 new jobs in August, compared to expectations of just 55,000, and July's data was revised upwards. After the publication, the probability of a hike in the key interest rate in September increased again.
Federal funds futures at the end of Friday trading showed about 57 percent probability of an increase, and according to data from LSEG, money markets estimate the chance at about 59 percent. A 25 basis point increase by the end of the year is already fully reflected in quotes.
Economists at “Barclays“ identified the employment report as a factor that “slightly“ supports the case for a 25 basis point increase in September, adding: “Attention now shifts to inflation data this week”.
Stephen Brown, chief economist for North America at “Capital Economics“ (Capital Economics), also puts the emphasis on the upcoming indicators. “The prospect of a rate hike this month still depends much more on the CPI and PPI data for August… but the strength of the labor market means that we will only need to see data that is consistent with a modest above-target increase in the core personal expenditure deflator (PCE) to change our forecast to a hike in September,“ he said.
“Danske Bank“ However, it notes that core inflation has remained relatively subdued over the past few months. “Commerzbank“ also expects overall consumer prices to rise by 0.4 percent due to higher gasoline prices, but forecasts core inflation to be just 0.2 percent on a monthly basis. That is why the bank is maintaining its forecast that the Fed will not raise rates on September 16.
The division is also visible among central bankers themselves. Christopher Waller said he would support keeping rates on hold if August data confirmed a weakening of inflationary pressures. John Williams, president of the Fed in New York, also indicated that the data available so far did not justify a hike. Michael Barr, on the other hand, believes that rates should be increased this month if inflation does not show sufficient progress.
This uncertainty is likely to remain a major source of volatility on Wall Street. "It is not words but actions that will show how seriously the central bank is taking the fight against inflation," said Johann Stanzl, chief market analyst at Consorsbank. “Whenever things get serious, she finds excuses to wait a little longer“.
Oil has become an inflation risk again
The war in the Middle East is largely behind the changed interest rate expectations. The new escalation of the conflict between the US and Iran, especially around the Strait of Hormuz, has increased fears of disruption of global energy supplies.
“Danske Bank“ notes that the actual traffic through the Strait of Hormuz is probably greater than what can be tracked through publicly available data. US Energy Secretary Chris Wright said in August that as many as 9 million barrels a day were passing through the strait. The bank said that estimate may be exaggerated, but some tankers are likely to remain outside the tracking systems.
For now, weaker Chinese crude oil imports are one of the factors keeping prices below $100 a barrel, Danske Bank said. However, clashes intensified again in late August and early September, including after US strikes on Iranian oil tankers in response to attacks on commercial shipping.
“Following recent statements by the US president and his vice president, there is some hope that the current escalation will remain temporary,“ said Thomas Altmann, portfolio manager at QC Partners.
For now, however, markets are paying an increasingly high risk premium. “Commerzbank“ points out that rising commodity prices have revived inflation fears among investors, after eurozone inflation reached 3.3 percent.
This is why “Charles Schwab“ has maintained a “cautious“ forecast for US stocks. “We are not sure how resilient US stocks will be if the conflict with Iran worsens and oil prices/yields continue to rise“, analysts point out. Additional risks are the traditionally weak September for stocks and the return of most fund managers after summer vacations.
The ECB faces an almost foregone conclusion
If the outcome remains open with the UFR, the markets are significantly more categorical with the ECB. An increase in the deposit rate by 25 basis points to 2.50 percent at the meeting on Thursday has been almost fully reflected in the rates.
The reason is the new acceleration of inflation. Consumer prices in the euro area rose by 3.3 percent year-on-year in August, compared with 2.9 percent in July, reaching their highest level since September 2023. Energy prices rose by 14.3 percent, while core inflation remained significantly lower at 2.4 percent.
“Such a move is more or less reflected in prices (of shares, ed.), was announced relatively openly by several members of the Governing Council and was also supported by the message in the monetary policy minutes of the July meeting“, said Nordea's chief analyst Jan von Gehrich and chief economist Thuli Koivu.
According to them, communication after the decision will be more important. “And in this regard, the ECB, which is guided by data and does not make any preliminary commitments, is likely to remain relatively restrained“.
The risk comes from energy. “If tensions in the Middle East continue to escalate before the meeting, and especially if gas prices maintain their upward trend, the message is likely to be “hawkish“ again,“, warn analysts at “Nordea“.
A similar assessment is made by “Helaba“. “The latest positive economic data offer additional scope for further tightening of monetary policy,“ said Ulf Krauss of the bank.
The chief economist at “Metzler Asset Management“ (Metzler Asset Management) Edgar Wolk also sees a September hike as the base case. “The ECB’s rate hike by 0.25 percentage points to 2.5 percent is already widely accepted,” he said, adding that another hike in December remains entirely possible.
Not all analysts, however, believe the ECB has much room for further tightening. Eckhard Schulte of MainSky Asset Management warns that further hikes after September could put an end to the eurozone’s barely-started cyclical recovery.
„Commerzbank“ also expects its deposit rate to be raised to 2.50 percent, but is at odds with market expectations for further action. Futures suggest two more hikes to 3 percent by mid-2027, while the bank believes that after September rates are likely to remain unchanged for a longer period.
The average forecast of economists for inflation in the eurozone in 2026 has already risen from 1.8 percent to 2.9 percent due to the war in Iran, and “Commerzbank“ predicts 2.8 percent. However, according to the bank, the deposit rate of 2.50 percent is already around the upper limit of the neutral level.
“Helaba“ also expects a longer pause after the September decision. Among the arguments are weak money supply growth, significantly higher refinancing costs for households and businesses, and stable long-term inflation expectations.
DAX remains resilient, but above 26,000 points a new test begins
European stocks have so far resisted the sharp movement in bond markets. The German DAX has again crossed the 26,000 point mark, after reaching a record 26,618 points at the end of August.
According to experts from “Index Radar“ (Index Radar) the market shows greater resilience than the traditionally unfavorable seasonality in September suggests.
“Although investors have apparently managed to shake off the “cocktail of worries“, composed of geopolitical and monetary policy unpredictability, the situation is likely to remain unstable“, commented Timo Emden, chief market analyst at “CapTrader“.
According to Thomas Altmann of “QC Partners“, the next question is whether enough new buyers will appear above 26,000 points, or investors will start taking profits again.
Economic signals from Germany are in the meantime better. The “Ifo“ (Ifo) raised its growth forecast for 2026 from 0.8 percent to 1.4 percent, supported by stronger exports and higher government spending on infrastructure, climate projects and defense. For 2027, the institute expects growth of 1.2 percent and for 2028, 0.8 percent.
However, the latest data remains contradictory. Industrial orders in July increased by 2.5 percent month-on-month and by 13.1 percent year-on-year, but excluding large orders they fell by 1.4 percent.
Dekabank's chief economist Ulrich Kater expects the Sentix investor confidence index to provide further insight into whether the economy is truly in a recovery phase despite structural problems.
Tech stocks seek new catalyst
With the end of the reporting season, attention is gradually shifting from corporate earnings to interest rates and valuations. However, the second-quarter results provide a solid foundation for the US market.
Of the 493 companies in the S&P 500 that have already published their reports, 69 percent have exceeded revenue estimates and 88 percent have exceeded earnings estimates. Earnings per share growth reached 53 percent and revenue growth reached 15.61 percent. Even after excluding the large one-time investment gains of the technology giants, the increase in earnings per share remained between 26 and 29 percent.
„Commerzbank“ points out even more clearly the discrepancy between fundamentals and market valuations in the technology sector. Expected earnings of companies in the Nasdaq 100 have increased by about 70 percent since the beginning of 2025, while the index itself has appreciated by about 40 percent. As a result, the forward price-to-earnings ratio has fallen from 26 in June to around 21.
That doesn’t mean the sector is immune to rising yields. On the contrary, technology companies with high valuations are among the most sensitive to changes in long-term interest rates.
“This is a stock market that is still dealing with the consequences of the loss of momentum in July and is looking for new leadership and a new story to define the next move,” said Gareth Melson of Natixis.
A new test will be Oracle’s results on Thursday. The company has already become one of the main indicators of the investment cycle around artificial intelligence. At the end of the last financial year, outstanding contract obligations reached $638 billion, but huge investments in cloud infrastructure resulted in negative free cash flow of $23.7 billion.
The focus will therefore be not only on the growth of the cloud business, but also on how quickly the huge order book is converted into revenue and what additional investments will be needed.
„Adobe“ (Adobe) is also due to publish results on Thursday, and investors will be looking for signals on the monetization of generative artificial intelligence and possible changes in strategy after the announced change of management.
Japan seeks the next step towards normalization
In Asia, investors will be watching whether the „Bank of Japan“ confirms expectations for continued policy tightening. Markets are already almost fully pricing in a September rate hike, so Thursday's speech by Board Member Kazuyuki Masu will be watched closely for signals on the pace of further steps.
“As markets increasingly focus on the Bank of Japan's policy outlook, we maintain a neutral stance on the Japanese yen and expect USD/JPY to hover around 160 as the authorities prioritize currency stability,“ said Yuxuan Tan, head of Asia interest rates and currency strategy at J.P. Morgan Private Bank.
According to Tan, such a scenario assumes three or four rate hikes over the next 12 months, which would bring the base rate to around 2 percent.
A revised estimate of Japanese second-quarter GDP is also due on Tuesday. Initial data showed growth of 0.3 percent quarter-on-quarter and 1.1 percent year-on-year, but stronger capital spending is creating grounds for an upward revision.
China's exports remain strong, inflation slowly returns
China will publish foreign trade and inflation data for August, which should show how much the world's second-largest economy continues to rely on exports, while domestic price pressures remain contained.
ING expects exports to grow 24 percent year-on-year and imports 32 percent, which would lead to a trade surplus of $107 billion. “City“ (Citi) forecasts even stronger export growth of 27.5 percent and a surplus of $119.1 billion.
Both institutions expect consumer inflation to accelerate to between 0.8 and 0.9 percent from 0.5 percent in July, partly due to higher fuel prices.
Economists at Nomura say that higher prices for food, gold, chips and AI-related products are likely to have supported both consumer and producer prices, although underlying inflation remains weak.
A combination of weak consumer price pressures and a continued decline in producer prices would reignite concerns about insufficient domestic demand. A similar scenario could affect European companies in the luxury goods, raw materials and industrial sectors.
India is growing fast, but paying more for energy
India continues to stand out among major economies. GDP grew 7.8 percent year-on-year in the April-June period, compared with market expectations of 7.5 percent. Investment growth reached 11.9 percent, and industrial production increased by 9.2 percent.
The strong start to the financial year led “Helaba“ to raise its forecast for India's growth to 7 percent from the previous 6.4 percent.
But energy is becoming a major risk. India imports more than 80 percent of its crude oil needs, and the value of imports rose by 56 percent between April and July to $63.4 billion.
The country has managed to reduce its direct dependence on the Strait of Hormuz, with about 70 percent of its oil now arriving via other routes. Russia's share of imports has risen from just under 20 percent in January to around 50 percent in July, and Delhi is diversifying supplies through Venezuela, Brazil, Nigeria, Oman and the United States.
However, this does not protect the economy from global price increases. Wholesale fuel and electricity prices in July were 20 percent above the level of a year earlier. Combined with a weak monsoon, this could also keep food inflation high.
“The conflict with Iran and the resulting energy price increases represent the biggest burden on the Indian economy at the moment“, analysts at “Helaba“ point out.
BRICS meets against the backdrop of a more fragmented world economy
Geopolitics is also added to the economic events of the week. India will host the 18th BRICS summit in New Delhi on September 12-13.
The forum comes at a time of rising energy costs, escalating trade disputes and ongoing conflict in the Middle East. Economic and financial cooperation and changes to the global trading system are expected to be among the main topics.
The expected visit of Chinese President Xi Jinping, his first to India in seven years, will attract particular attention, amid efforts by Beijing and New Delhi to stabilize bilateral relations.
„Danske Bank“ points out that in relations between China and the United States, attention is now gradually turning to the upcoming meeting between Xi and US President Donald Trump.
September begins with more risks, but markets are holding up so far
Stock markets are entering a traditionally weak September with an unusual combination of strong corporate profits, relatively stable economic growth and at the same time rising energy prices, bond yields and expectations for higher interest rates.
In August, the Nasdaq rose by more than 4 percent and the DAX by about 2.5 percent and reached a new historical high. “Haspa“ notes that international equity markets have so far remained relatively stable despite strong fluctuations in bond markets, and the potential for a further significant increase in long-term yields may already be limited.
For now, strong earnings and economic data are supporting stocks. The ISM index for the US services sector rose from 54.1 to 55.4 points, and new orders reached 60.9 points. At the same time, the manufacturing index fell from 55.6 to 54.6 points, and the hiring data showed some caution among companies.
It is this mixed picture that makes the upcoming inflation data so important. A higher-than-expected consumer price index would increase the likelihood of a September interest rate hike in the US, would likely push yields up again and put pressure on technology stocks. A weaker indicator could have the opposite effect.
Andreas Lipkov, chief market analyst at “CMC Markets“, calls the upcoming week “one of the most important weeks in September from a monetary policy perspective“. On Thursday, the ECB's decision will practically coincide with the publication of US producer prices, and a day later, the consumer price index data will come.
Therefore, the relatively simple relationship outlined by “Charles Schwab“ will probably remain valid for at least another week: cheaper oil and a retreat in yields would give stocks a breather, while a new rise in energy prices would make it difficult for central banks and markets at the same time.
And the most direct catalyst could come on Friday. According to “Charles Schwab“ “a moderate/weaker-than-expected CPI report on Friday would almost certainly provide a boost“ to markets.