The Daily: Oil Relief During CPI Week

MACRO - What’s Driving Overnight Risk?

Overnight Price Action

• Asia: Higher; MSCI Asia ex-Japan rose more than 1%, South Korea’s KOSPI jumped 3.78%, and Japan’s Nikkei gained 1.67% as chip and AI-infrastructure sentiment carried over from Wall Street
• Europe: Firmer; STOXX 600 is up about 0.25%, with tech higher and crude below $90 helping the regional tape
• U.S.: Futures are slightly higher; Dow futures are up 114 points, S&P 500 futures are up 14.25 points, and Nasdaq 100 futures are up 28.25 points ahead of PPI and claims
• Rates: Treasury yields are easing after the in-line CPI report; the 10Y is around 4.67%, while the 30Y remains near 5.24% before today’s long-bond auction
• FX: The U.S. Dollar is near a two-week high around DXY 99.9, with Iran risk and higher energy sensitivity in Europe and Japan limiting the post-CPI Dollar downside
• Commodities: Oil is lower after six straight gains; Brent is near $87.30, WTI is near $81.65, gold is pulling back from a two-month high near $4,430 futures, and silver is near $64.40

Ticker	Change	IVR	IVx 5d Chg
/ESU6	0.2%	22.9	0.3%
/NQU6	0.06%	43.3	-2.1%
/CLU6	-1.99%	25.2	37.5%
/ZNU6	0.1%	25.6	0.1%
/GCZ6	-0.58%	33.5	-1.1%
/6EU6	-0.12%	34.4	-0.3%
/BTCQ6	0.08%	7.6	3.2%
VIX3M-VIX Spread	0.01 pts	4 (last)	3.55 pts (5d ago)

Catalysts

• July CPI rose 0.1% m/m, in line with expectations, after falling 0.4% in June. Headline CPI slowed to 3.4% y/y from 3.5%. Core CPI rose 0.2% m/m and slowed to 2.5% y/y from 2.6%.
• CME FedWatch pricing now shows roughly a 66% chance of a September hold, up from roughly even odds before CPI.
• Oil fell nearly 2% after U.S. commercial crude inventories rose 17.4M barrels to 424.4M, the largest weekly build since January 2023.
• OPEC cut its 2026 world oil demand-growth forecast to 580K bpd, while the IEA said consumption could contract by 1.6M bpd this year.
• A senior Iranian source said there has been no progress reviving the interim U.S.-Iran deal, and Hormuz vessel crossings excluding container ships dropped to five Wednesday, the lowest in three weeks. Trump wrote on Truth Social that the U.S. has total control of the Strait of Hormuz and called the naval blockade a “wall of steel.”
• Cisco fell nearly 6% premarket despite fiscal Q4 revenue of $17.3B, up 18% y/y and above FactSet estimates for $16.8B. Cisco guided fiscal 2027 revenue to $72.2B-$73.4B, above Wall Street expectations near $69.1B.
• Cerebras fell more than 17% premarket after missing quarterly revenue estimates, even as it raised its 2026 adjusted revenue forecast to $880M-$890M.
• Coherent traded lower despite adjusted fiscal Q4 EPS of $1.74 versus consensus near $1.62.
• Dell and HP gained after Lenovo posted a 43% first-quarter revenue increase on AI infrastructure demand.

Market Implication

CPI gave the market permission to keep the record-high bid alive. PPI decides how much of that inflation relief survives into the Fed’s preferred PCE math. Oil pulling back below $90 helps, but the reason for the move is mixed: a huge U.S. inventory build, softer demand forecasts, and a Hormuz route that still looks impaired. The AI tape is more selective today. Cisco, Cerebras, and Coherent all show demand. Their stock reactions show the market is paying for guidance quality, margin durability, and proof that AI orders convert into earnings power.

Ticker	1d % Chg	IVR
Best Performing Stocks Pre-Market, 8/13/26
DELL	+5.1%	70.9
PANW	+2.5%	61.8
MUFG	+2%	53.1
Worst Performing Stocks Pre-Market, 8/13/26
CSCO	-5.7%	91.3
BHP	-1.8%	70.3
SKHY	-1.1%	6.6

Stat of the Day: The corporate buyback window reopens this week with more than $1 trillion of announced authorizations, the largest amount on record at this point in the calendar, per Citadel.

THEMATIC - Forces Behind the Tape

1. PPI Got the Next Inflation Vote

CPI came in clean enough for equities and while it was helpful, to be clear, it was not decisive. Inflation is still above target, energy is still a swing factor, and services costs have not completely loosened. The market response shows relief rather than conviction. PPI offered similar confirmation, with price pressures at or below expectations. So the bond market is still sending a mixed signal. The 2Y has eased with Fed-hike odds. The 30Y remains close to 5.25%, with supply, deficits, oil risk, and term premium still in the tape. Today’s 30-year auction is a useful stress test in the wake of this week’s inflation gauges.

2. AI Infrastructure Lost Its Free Pass

Cisco should have been an easy AI victory lap. Revenue rose 18% to $17.3B, above FactSet expectations. The stock still fell in premarket trading. That reaction says a lot. Investors are no longer treating AI orders as enough. Cerebras delivered the sharper warning. The company raised its 2026 adjusted revenue forecast to $880M-$890M and lifted its adjusted gross-margin outlook to 41%-43%. The stock still fell more than 17% after missing quarterly revenue estimates and posting lower adjusted gross margin. Coherent adds the same message from optics. Adjusted EPS beat, guidance was solid, and the stock still traded lower. Applied Materials is the next gatekeeper, where a clean guide would help stabilize the AI-infrastructure trade after Cisco and Cerebras. A soft margin or order comment would bring back the guidance problem fast.

3. Oil Finally Cooled, But the Route Risk Stayed

Crude pulled back for the first time in a week. Brent is near $87.30, WTI is near $81.65, and the immediate pressure on CPI week has eased. The driver was not a clean geopolitical improvement. U.S. commercial crude inventories rose by 17.4M barrels, the largest weekly build since January 2023. OPEC cut its demand-growth forecast, and the IEA now sees consumption contracting more than it did last month. Lower prices are coming from softer demand and a temporary inventory cushion. Nevertheless, Hormuz still looks broken in market terms. Vessel crossings excluding container ships dropped to five Wednesday, the lowest in three weeks. The market can trade lower crude today, for now, but not forever if this continues.

MICRO - Today’s Catalysts

Economic Calendar (CT)

7:30 - July PPI, Weekly Jobless Claims

12:00 - 30-Year Treasury Auction

Friday 7:30 - July Retail Sales, Industrial Production, University of Michigan Consumer Sentiment

TRENDING - Reddit Retail Radar

Rank	Ticker	24-hour Upvotes
1	NBIS	5758
2	SPCX	2316
3	HTZ	1211
4	API	1189
5	DJT	955
6	SPY	939
7	MU	840
8	CSCO	500
9	ONDS	417
10	DTE	356

KEY LEVELS TO WATCH

• S&P 500 (/ESU6) – Support/Resistance: 7761/7820(ATH)
• Nasdaq 100 (/NQU6) – Support/Resistance: 29215/30074
• Crude Oil (/CLU6) – Support/Resistance: 80.06/86.87
• U.S. 10Y Yield – 4.675%, YTD high sits at 4.743%
• VIX – 14.54 pre-market, past month range of 14.77 to 20.88

Trade Setup Bias

Constructive, with cleaner inflation support than Tuesday and more selectivity in AI than Wednesday. A soft PPI supports duration, software, small caps, housing, and gold. A claims print near 200K keeps the labor slowdown contained. A weak 30Y auction would put long-end supply risk back into the tape even with tame inflation. AI infrastructure remains tradable, but the easy long basket is gone. Cisco, Cerebras, and Coherent show that guidance needs revenue conversion and margin proof. Applied Materials is the cleanest late-week test for semicapex, HBM, DRAM, advanced packaging, and equipment demand. Energy is tactical while Brent sits below $90, but Hormuz remains a weekend risk.

Bottom Line

Thursday is a PPI and quality-control day. CPI landed in line, Fed hold odds moved higher, and crude finally cooled after a six-session run. That gives equities room. The next check is producer inflation because it feeds the PCE math and can still complicate September pricing. The AI trade looks healthier than it did last week, though Cisco, Cerebras, and Coherent remind traders that the market wants more than AI language. Applied Materials now carries the infrastructure read into the close. The tape can keep grinding if PPI behaves, claims stay near 200K, the 30Y auction clears without drama, and Brent stays under $90 into Friday retail sales.

 

Christopher Vecchio, CFA, tastylive’s head of futures and forex, has been trading for over 20 years. He has consulted with multinational firms on FX hedging and lectured at Duke Law School on FX derivatives. Vecchio searches for high-convexity opportunities at the crossroads of macroeconomics and global politics. He hosts Futures Power Hour Monday-Friday and Let Me Explain on Tuesdays, and co-hosts Overtime, Monday-Thursday. @cvecchiofx