FISG Daily Market Wrap 11th September

Oil Nears $110 as Inflation and Rate-Hike Concerns Pressure Asian Markets

Asian stocks and bonds fell on Friday as oil prices surged and investors awaited US inflation data for clues on whether the Federal Reserve will raise interest rates this month. The MSCI Asia Pacific Index dropped 1.7%, heading for its biggest decline in three weeks. Brent crude rose 0.2% to $107.86 a barrel after briefly approaching $110, while bonds came under pressure after the US Treasury bought back fewer securities than investors had expected. The move pushed the US 10-year Treasury yield close to 5%. Asian government bonds also followed Treasuries lower, with Australia’s three-year yield jumping as much as 20 basis points to 5.05%, its highest level since 2011. New Zealand’s two-year yield climbed 25 basis points. The US 10-year yield was little changed at 4.96% on Friday after surging 12 basis points in the previous session, taking its weekly increase to 19 basis points. August CPI has become increasingly important for the Federal Reserve’s policy outlook. Fed officials, including Governor Christopher Waller, have indicated that evidence of moderating inflation will be crucial at the September 15–16 meeting. Bloomberg Economics expects headline CPI to accelerate as gasoline prices rebound, while core CPI is projected to rise at a similar pace to July. The surge in oil prices is creating another challenge for central banks as conflict around the Strait of Hormuz threatens to keep energy costs elevated. Increased attacks on shipping have lifted prices for oil, natural gas, and diesel, raising concerns that higher energy costs could feed through to broader inflation. Meanwhile, Oracle shares gained in extended trading after the company reported faster-than-expected growth in its cloud business. In the Middle East, Iran-backed Houthis advanced toward coastal areas around the Bab al-Mandeb Strait as they sought to seize Mokha near the southern end of the Red Sea. Overall, rising oil prices and renewed pressure on bond yields have placed global markets under pressure ahead of the US inflation data. Investors are now focused on whether August CPI will provide evidence of moderating inflation and help clarify the Federal Reserve’s decision for its September 15–16 meeting. FISG Daily Market Wrap provides a concise view of the forces moving global markets, helping investors stay informed and better prepared for what comes next.