Global markets focus on inflation, war, and rate hikes as oil reaches $100

Huo Xing Finance reports: On September 12, over the past week, global markets focused on three key themes: "inflation, war, and rate hikes." U.S. August CPI accelerated again, significantly increasing market expectations for a Fed rate hike at its September 15–16 meeting; the Middle East situation continued to escalate, pushing oil prices back above $100; and the European Central Bank announced a 25-basis-point rate hike, as major central banks globally once again face inflationary pressures. U.S. August CPI rose 0.4% month-over-month and 3.4% year-over-year, with core CPI up 0.3% month-over-month. Combined with previously strong PPI and employment data, markets widely anticipate a 25-basis-point Fed rate hike next week. Meanwhile, the 10-year U.S. Treasury yield neared 5%, and the dollar first declined then rebounded this week. Oil emerged as one of the week’s strongest-performing assets. Middle East conflicts continued to spread to the Strait of Hormuz, the Red Sea, and the Bab el-Mandeb Strait, compounded by attacks on Saudi energy infrastructure, pushing Brent crude briefly above $100. The temporary shutdown of Saudi Arabia’s east-west oil pipeline further intensified supply concerns. If shipping through the Strait of Hormuz or the Red Sea remains disrupted, institutions like Goldman Sachs believe oil prices could rise further. This week, the ECB raised its deposit facility rate by 25 basis points to 2.5% and warned that Middle East conflicts could keep inflation above its 2% target for an extended period. Markets are also pricing in further rate hikes in December. Politics also became a market variable. At the Republican midterm convention, Trump proposed that if Republicans retain control of Congress, every adult U.S. citizen would receive a $5,000 “Trump Dividend,” with potential costs exceeding $1 trillion—though funding sources and implementation details remain unclear. On Ukraine-Russia fronts, high-level U.S.-Russia contacts have increased, raising market expectations for renewed negotiations, yet military actions have not noticeably de-escalated. Meanwhile, U.S.-Canada trade tensions continue to intensify, with potential measures such as auto tariffs still capable of further disrupting North American supply chains. In the tech sector, another major theme emerged: as the AI industry accelerates its expansion, concerns over security risks and capital bubbles are growing simultaneously. Internal researchers at OpenAI and Anthropic have publicly discussed risks of AI loss of control and self-improvement runaway scenarios; whether AI investments can sustain returns has become a new focus for markets. Overall, this week’s market logic has shifted from a simple bet on economic growth toward repricing the combination of “high oil prices, high inflation, and high interest rates.” The future trajectory of risk assets will increasingly depend on energy prices and the Fed’s policy path.