Daily Market Outlook, August 12, 2026
Daily Market Outlook, August 12, 2026
Patrick Munnelly, Partner: Market Strategy, Tickmill Group
Munnelly’s Macro Missive -CPI To Eclipse AI Rally Returns
Asian equities rallied and US futures edged higher as strong tech earnings reignited enthusiasm around AI spending, but the macro backdrop is still being shaped by oil, inflation and the Fed. The equity tape is once again being pulled higher by semiconductors and AI infrastructure, while Brent’s push toward $90/bbl keeps a layer of caution in place ahead of today’s US CPI report. The market wants to celebrate AI revenue conversion, but it still needs inflation to behave.
The MSCI Asia Pacific index rose 0.7%, helped by a powerful rally in Korea. The Kospi surged 4%, with Samsung and SK Hynix both up around 7% as investors responded positively to shareholder-return plans and renewed confidence in the AI supply chain. Reports around investment intentions from Singapore’s Temasek Holdings also helped reinforce the sense that institutional capital remains committed to the AI theme. US equity futures followed the stronger Asian tone. Nasdaq 100 futures rose 0.3%, supported by upbeat after-hours moves in AI-linked names. CoreWeave jumped 16% after AI-related spending drove stronger-than-expected sales growth, while Super Micro Computer gained 7.6% after beating revenue forecasts. That matters because the market is increasingly rewarding companies that can show direct revenue capture from AI capex, not merely exposure to the theme. The AI trade is still alive, but it is becoming more evidence-led.
European equities look set for a steadier open, with investors balancing the tech impulse against the inflation risk from higher oil. The broader message from equities is constructive: earnings are still capable of offsetting macro unease, particularly where AI demand is translating into orders, sales and cash flow. But the leadership remains narrow. The rally is strongest where the link between AI investment and near-term monetisation is clearest. Oil remains the main macro complication. Brent crude briefly touched $90/bbl, despite comments from Pakistan’s defence minister suggesting the US and Iran were “close to some sort of arrangement” over the Strait of Hormuz. The problem is that there is little evidence either side has moved away from Monday’s apparently irreconcilable positions, particularly around US demands for compensation from Iran. Last week’s optimism over a possible deal has faded, and the market is again pricing a higher geopolitical risk premium.
The US and Iran both appear to have adopted firmer negotiating stances, leaving investors sceptical that a quick restoration of normal Hormuz traffic is imminent. Brent’s move is important not just because of the immediate inflation impulse, but because it challenges the idea that the Fed can comfortably lean on softer labour data. Higher energy prices feed into headline CPI, gasoline prices and inflation expectations, and they complicate the path toward a more durable disinflation narrative.
Treasury yields have been comparatively stable after falling during the London session, suggesting rates markets are waiting for CPI rather than chasing the oil move aggressively. The dollar weakened against most G10 peers, though the yen remains under pressure. USD/JPY is holding around 159.40, close enough to the 160 level to keep intervention risk firmly on the radar. The yen’s stability is fragile rather than reassuring: wide yield differentials, higher energy import costs and fading intervention effects all remain headwinds.
Today’s US CPI report is the key macro event. June’s downside surprise helped temper immediate inflation fears, and July should extend some of that improvement, helped by more benign energy inputs during the relevant measurement window. Headline CPI is expected to rise just 0.1% m/m, taking the annual rate down to 3.4% from 3.5%. Core CPI should be firmer but still contained, rising 0.2% m/m, with the annual rate easing to 2.5%. Tame goods pricing should help, while rental inflation is the main upside risk, though probably not enough to materially change the monthly picture. At face value, that would look like another helpful inflation print. It would also sit awkwardly alongside the three hawkish dissents at the July FOMC. But the Fed will be wary of taking too much comfort from a soft-looking report, because the deceleration may flatter the underlying price dynamics. The inflation process is improving, but not necessarily in a way that removes the risk of renewed pressure later in the year. Pipeline risks remain significant. Producer-side cost pressures have not fully passed through, import prices are still accelerating, and inventories continue to deplete. That inventory point looks underappreciated. If firms have less stock cushion at the same time input costs are rising, the incentive and ability to pass costs through to consumers increases. Strong consumption makes that easier. There is still little evidence that a softer labour market is materially denting America’s appetite to spend. That is the awkward part for the Fed. Recent data, including weaker payrolls, has raised the bar for near-term tightening. A softer CPI print today would reinforce the case for patience. But patience is not the same as victory. If monetary policy is only mildly restrictive, as Boston Fed President Susan Collins suggested in an FT interview, then second-round effects from energy and other input costs remain a live risk. Collins struck a balanced tone, noting that rates are already “mildly restrictive”, while also saying she sees the possibility that conditions in coming months may require tighter policy.
In practical terms, the Fed is likely to procrastinate in the near term. With the mid-term election approaching and Chair Warsh’s taskforces unlikely to report before then, the hurdle for immediate tightening is higher than it was before the latest payrolls data. Markets may take comfort from cleaner inflation measures, including trimmed-mean gauges, if today’s CPI is soft. But the bigger question is whether policy is restrictive enough to prevent renewed commodity volatility from feeding into the broader price level.
Macro to Micro: AI is giving equities another powerful tailwind, especially in Korea and US tech futures, but CPI will decide whether the macro backdrop remains supportive. A soft inflation print could extend the equity rally and keep yields contained. But Brent near $90/bbl, unresolved Hormuz negotiations and resilient US demand mean the Fed cannot declare an all-clear. The market may get another good CPI number today, but it should be careful not to mistake a soft print for a solved inflation problem.
Overnight Headlines
US CPI Report First Test For An Increasingly Hawkish Fed
US Sees Iran War Oil Supply Disruptions Lasting Through 2027
Oil Holds Gain As Pakistan Says US And Iran Close To Hormuz Deal
Korea’s 30-Year Bond Yield Hits Record On Oil, Rate Hike Bets
China Taps Deutsche Bank As First Foreign Yuan Clearer In Europe
China Revives Free-Trade Zone Bond Market After 2023 Crackdown
China Races To Solve $148B Property Threat As Leases End
Russia Turns To India For Gasoline As Ukraine Pummels Refineries
US VP Vance Asked Ukraine To Halt Strikes On Tankers Using Russian Port
SK Hynix, Samsung Extend Gains After Report Temasek To Invest
CBA Profit Tops Estimates As Home And Business Lending Grows
CoreWeave Shares Jump As Revenue Doubles From Year Earlier
Super Micro Computer Q4 Profit Surges As Gross Margin Improves
GM Sets Up $4.5B Plan To Ensure Supply Of Critical Parts
FX Options Expiries For 10am New York Cut
(1BLN+ represents larger expiries and is more magnetic when trading within the daily ATR.)
Wednesday 12/08
EUR/USD: 1.1600 (EU1.3bn), 1.1550 (EU1.1bn), 1.1500 (EU1.1bn), 1.1445 (EU735m), 1.1400 (EU1.1bn)
USD/JPY: 161.00 ($538m), 159.50 ($804m), 159.00 ($1.2bn), 157.00 ($810m)
USD/CAD: 1.3930 ($560m)
AUD/USD: 0.7050 (AUD840m)
Thursday 13/08
EUR/USD: 1.1620 (EU938m), 1.1605 (EU601m), 1.1600 (EU2.9bn), 1.1575 (EU987m), 1.1560 (EU963m), 1.1550 (EU1.5bn), 1.1545 (EU694m), 1.1540 (EU953m), 1.1525 (EU536m), 1.1520 (EU825m), 1.1515 (EU1.1bn), 1.1500 (EU1.8bn), 1.1465 (EU518m), 1.1450 (EU509m), 1.1415 (EU1.6bn), 1.1405 (EU551m), 1.1400 (EU816m)
USD/JPY: 160.00 ($976m), 159.00 ($1.6bn), 158.50 ($623m), 158.25 ($737m), 158.00 ($735m)
GBP/USD: 1.3515 (GBP559m), 1.3380 (GBP996m)
USD/CHF: 0.8100 ($1.3bn)
AUD/USD: 0.7000 (AUD874m)
CFTC Positions as of 7/7/26
Equity fund speculators raised their net short position in the S&P 500 CME by 32,299 contracts to a total of 319,577. Meanwhile, equity fund managers reduced their net long position by 2,008 contracts to 937,107.
Speculators also increased their net short positions in CBOT US 5-year Treasury futures by 179,319 contracts (totaling 1,325,719) and in CBOT US 10-year Treasury futures by 103,124 contracts (totaling 979,243). Conversely, they decreased their net short positions in CBOT US 2-year Treasury futures by 120,346 contracts (to 1,004,228), in CBOT US UltraBond Treasury futures by 5,723 contracts (to 314,985), and in CBOT US Treasury bonds futures by 41,225 contracts (to 176,272).
Bitcoin's net long position stands at 3,752 contracts.
The Swiss franc has a net short position of -32,822 contracts, the British pound -57,814 contracts, the euro -58,091 contracts, and the Japanese yen -45,473 contracts.
Technical & Trade Views
SP500 - 7620 weekly bull/bear level
Daily VWAP Bullish
Weekly VWAP Bullish
Above 7620 Target 7870
Below 7600 Target 7485
DXY - 99 weekly bull/bear level
Daily VWAP Bullish
Weekly VWAP Bearish
Above 99 Target 98
Below 99 Target 100
EURUSD - 1.1550 weekly bull/bear level
Daily VWAP Bullish>Bearish
Weekly VWAP Bullish
Above 1.1550 Target 1.17
Below 1.1480 Target 1.1420
GBPUSD - 1.3450 weekly bull/bear level
Daily VWAP Bullish
Weekly VWAP Bullish
Above 1.3450 Target 1.3690
Below 1.34 Target 1.33
USDJPY - 160 weekly bull bear level
Daily VWAP Bullish
Weekly VWAP Bearish
Above 155 Target 160
Below 155 Target 152
XAUUSD - 4170 weekly bull bear level
Daily VWAP Bullish
Weekly VWAP Bullish
Above 4170 Target 4400
Below 3940 Target 3570
BTCUSD - 64k weekly bull bear level
Daily VWAP Bearish
Weekly VWAP Bullish
Above 64k Target 71k
Below 61k Target 52.2k
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!