AFS Markets Blog: Morning 13/08/2026

• Meanwhile in markets, stuff is pretty static except for AI stocks, which are extending their recovery, and Fed rate hike pricing for the September FOMC, which has faded further;

• Starting with the latter, fed funds futures now price in a lousy 9bps of hikes for the September FOMC. At the end of July – so, before the weak July payrolls and soft CPI releases – more than a quarter point hike was priced in. The economic data will get another shot early next month with both payrolls and CPI released in time before the meeting. But the bar for hot prints to tilt the Fed towards a hike is high. So high, in fact, that Chairman Warsh would have to use Jackson Hole to tee up a hike. Since we already know that he’s all talk and no walk, fade that pricing for a September hike;

• On our AI equity screener both hyperscaler and key hardware stocks have extended their rebound from the early summer drubbing. Granted, while most stuff is double digit percentages below the ATHs, the greenshoots are now taking the overhand. Take Nvidia, without a doubt the heart of the boom/bubble. Up eight percent over the past four weeks and now *only* five percent below its ATH. Driving the AI rebound are AI (adjacent) companies’ earnings releases that have been generally well-received. Furthermore, it’s also a case of selling exhausting itself;

• Elsewhere, in Asian equity space I clock the Korean Kospi 3.7% higher this morning. Which is a *normal* intraday move for that index. Other Asian equity markets are up too while S&P 500 futures are just meandering. US Treasury yields are flattish, having erased yesterday’s CPI-induced declines. USDJPY is half a point lower at 159.26 after a sources-based wire report mentioned that the government has finally ceded (perhaps to US pressure) in supporting a more aggressive rate hike path. That greenlights either a September or an October hike according to the report. For the record: a September hike is fully priced, with the next move mostly priced in for early 2027. Mind you that December has moved to a coin toss between a hike and a hold;

• EURCHF, the other cross to watch, has extended its recent gains, reaching an 8-month high of 0.938 overnight. The broad dollar is flat this week, but down notably as of late because of the aforementioned combo of weak payrolls and soft CPI. Brent crude futures are loitering close but below the $90 handle. There’s little going on in the Iran war slash conflict. No peace headlines, no air strike headlines either;

• Looking ahead, I am staring at an unexciting calendar with US PPI, jobless claims, and a single Fed-speaker being the key events. The Norges Bank will announce rates this morning. Which consensus expects to be a hold plain and simple.

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