GGMA Markets Briefing: Oil Jumps as US-Iran Fire Resumes; Bessent Presses BOJ
Brent crude rose 3.26% to $90.97, and WTI gained 3.11% to $85.99 after the United States and Iran exchanged fire for the first time in more than a month (BBG).
US Central Command said its forces struck two rocket launchers on Larak Island on Sunday as Revolutionary Guard units prepared to fire rockets carrying sea mines into the Strait of Hormuz, and Iran retaliated with a missile and drone attack on the King Hussein and Al Azraq air bases in Jordan (CNBC). President Donald Trump threatened Kharg Island, Iran's main oil export terminal, saying it is going to be "blown to smithereens" (CNBC). Iran's Revolutionary Guard said a supertanker on the southern Hormuz route was hit by two naval mines and halted after catching fire, and said it shot down a US MQ-9 drone over the strait (LS). Traders monitoring cargoes say crude is still transiting at a reduced, tolled pace (BBG). "The direct attack on Iranian launch sites does little to advance talks, and neither will Iran firing back at Jordan," said Chris Weston, head of research at Pepperstone, adding that "there seems little appetite, at this stage, to push crude materially higher" (BBG).
In stocks, the Nikkei fell 0.50% to 66,120, and the Hang Seng lost 0.47% as the escalation met a market already repricing US rates after Kevin Warsh's Jackson Hole speech (Yahoo). Korean shares underperformed, dragged by the chipmakers Samsung Electronics and SK Hynix (BBG). The CSI 300 eased 0.25% even after a stronger manufacturing survey (Yahoo). S&P 500 futures slipped 0.26% to 7,702, Nasdaq futures fell 0.17%, and European futures pointed lower (Yahoo).
Regarding central banks, bond investors are pushing back on the rate-hike bets Warsh's speech ignited. Christophe Boucher, chief investment officer at ABN AMRO Investment Solutions, said "the reaction function is still unclear" and warned credibility concerns may re-emerge if the Fed holds again (BBG). Tracy Chen, a portfolio manager at Brandywine Global, said "talk is talk. Action speaks louder" (BBG). TD Securities' base case remains a hold, Deutsche Bank now regards a September rise as the most likely outcome, and Barclays changed its forecast to expect increases in both September and December (LS) (BBG) (LS). US Treasury Secretary Scott Bessent said he expects Bank of Japan Governor Kazuo Ueda to "do the right thing" on policy, declared that "we probably reached the end of Abenomics", and plans to meet Ueda at the G20 gathering that opens in Asheville today (Reuters).
Market pricing: STIR traders put a September Fed rise near 60%, the ECB's 10 September move near 90%, a Bank of Japan hike on 18 September at 91%, and Wednesday's RBNZ increase at 95%, while a Reserve Bank of Australia move on 29 September is priced closer to a coin flip at 49%.
In currencies, the yen firmed 0.16% to 159.84 per dollar after Friday's break of 160, a move that has strategists mapping the next intervention triggers just above current levels and then in the zone where the authorities last acted (BBG). Rinto Maruyama, senior rates and FX strategist at SMBC Nikko, noted the government "placed considerable emphasis on maintaining an element of surprise" in the previous episode (BBG). The dollar index eased 0.09% to 99.62, the euro was steady at 1.1588, and the offshore yuan firmed 0.14% to 6.7215 (Yahoo). The Australian dollar sat at 0.7165, and its top-ranked forecasters at Santander and Danske Bank called the rally's peak, both seeing 70 US cents by year-end with the RBA standing pat (BBG).
In bonds, the two-year Treasury yield slipped 1.4 basis points to 4.33%, giving back part of Friday's surge, while the 10-year was little changed at 4.71% (BBG). The 10-year JGB yield rose 2.0 basis points to 2.95%, near the three-decade highs that have analysts arguing the GPIF pension fund would be justified in raising its domestic bond allocation, a debate with multi-trillion-yen flow implications for both JGBs and the yen (BBG). Weekend polls showing Prime Minister Sanae Takaichi's support steadying leave her unfunded food tax cut on track for a September airing, which keeps the fiscal question attached to the long end (BBG). The two-year JGB added 1.7 basis points to 1.73%. Bund futures eased 0.14% ahead of the German inflation print, and gilts are shut for the UK bank holiday. In France, Socialist Party chief Olivier Faure joined the presidential race as the party weighs whether to back Prime Minister Sebastien Lecornu's 2027 budget, the arithmetic behind bond investors' renewed focus on French debt (BBG).
In commodities, gold fell 0.41% to $4,437, extending the slide that began when higher-rate expectations dimmed the metal's appeal on Friday (BBG). Copper added 0.20% after the Chinese manufacturing beat (BBG). Goldman Sachs more than doubled its diesel margin forecasts, warning that strikes on refineries in the Middle East and Russia have pushed refined-product margins to new highs with diesel at the epicentre of the rally (BBG). Trump said Venezuelan crude will be used to refill the depleted US strategic reserve, building on Washington's newly asserted control over Venezuelan output (BBG). Bitcoin fell 0.76% to 77,991, and ether dropped 2.16% (Yahoo).
In corporate news, BYD's overseas revenue exceeded its domestic take for the first time and the shares fell in Hong Kong, while Meituan rose after a revenue beat prompted brokers to lift price targets (BBG). HDFC Bank's search for a new chief executive after Sashidhar Jagdishan's surprise decision to step aside will test confidence in India's largest private-sector lender (BBG). In Australia, administrators said the collapse of the Sydney developer Bathla is turning into one of the country's biggest real-estate failures, with estimated liabilities in the billions before counting apartment-buyer deposits (Afr).
Data and the day ahead: Japan's July industrial production rose 0.1% on the month against a consensus for a 0.7% fall, from 1.9% previously, and retail sales jumped 4.0% on the year against 3.3% expected, from a revised 0.6% (BBG). China's official manufacturing PMI rose to 49.8 in August against 49.5 expected, from 49.2, a second month in contraction, while the non-manufacturing gauge missed at 49.0 against 49.4, held down by a weather-hit construction component (BBG). New Zealand's ANZ business confidence eased to 53.7 from 56.1 two days before an RBNZ decision at which just over half of the NZIER Shadow Board recommends a quarter-point rise (Org). Australia's Melbourne Institute inflation gauge accelerated to 4.8% on the year from 4.0%, even as the monthly pace cooled to 0.5% from 1.0% (Edu), and second-quarter company profits rose 1.8% against 2.0% expected while inventories fell 0.2% against a 0.5% rise expected, a drag on Wednesday's GDP arithmetic. Still to come today: the German regional inflation prints from 10:00 CET ahead of the national preliminary release at 14:00 CET, the day's main event, with the SNB's weekly sight-deposit data at 10:00 CET, Riksbank Deputy Governor Per Jansson in Västerhaninge at 10:30 CET, and the Dallas Fed manufacturing survey at 16:30 CET in a US afternoon thinned by the London holiday. The G20 finance meeting runs today and tomorrow (BBG). Later this week: the RBNZ and Bank of Canada decide on Wednesday, euro-area flash inflation lands Tuesday, and the August US payrolls report closes the week on Friday (LS).
Time Stamp: 31 August 2026, 07:49 CET