Daily Research
US equities sold off after leaders from OpenAI, xAI and Anthropic called for a slower pace of AI development on safety grounds. The S&P 500 fell 0.47% to 7,621, the Nasdaq 100 lost 0.82% to 29,127, the Dow dropped 0.31% to 52,412 and the Russell 2000 declined 0.41% to 2,892. Semiconductors and memory names led the fall, although software and cybersecurity outperformed as displacement fears eased. The indices recovered from their lows, leaving a defensive rather than disorderly close.
The dollar benefited from the early risk-off move and the approach of the FOMC. Money markets put a roughly 90% probability on a 25bp hike, while a Reuters poll still found 15% expecting a hold. Treasuries eventually rallied and the curve flattened, but the 10-year yield briefly touched 5% for the first time since 2023. The New York Fed scheduled about US$15.6bn of reinvestment purchases for 15 September–14 October, down from US$17.0bn, with no reserve-management purchases.
Oil rose after the postponement of an Iran–Gulf meeting, the Saudi East–West pipeline shutdown and reports that the outage could last several weeks. Prices gave back their highs after President Trump said Iran wanted an agreement and that Ukraine and Russia had agreed not to attack energy infrastructure. Iranian sources disputed the first claim, while Moscow remained reluctant to conclude an energy ceasefire before winter. The result is a market paying for disruption but not yet for a durable diplomatic failure.
Iran's Strait Authority listed 77 vessels it said had violated protocols and warned of restrictions, detention or confiscation. The IRGC said Hormuz remained closed and under its control and claimed the supertanker Algaya struck a mine; CENTCOM denied that account. Saudi Arabia was reportedly trying to move more barrels through the strait, while the US Energy Secretary said the seven-day shipment average was rising but global refining capacity remained too tight. Conflicting claims make verified vessel flows more important than official rhetoric.
The Houthis claimed attacks on King Khalid Air Base and Saudi reinforcements in Al-Jawf, while Saudi Arabia reportedly struck Mokha. US Vice President JD Vance said he was in contact with the Houthis, Saudi Arabia and the UAE, and the UK was considering Saudi requests for military support. A new Saudi–Yemen front would turn an oil-shipping shock into a broader security and fiscal shock; verified de-escalation would remove that premium quickly.
Canada welcomed the prospect of a US agreement but kept its red lines, China warned that protectionism would raise inflation, and Germany considered lobbying for a tougher EU policy toward China. Kyiv accepted a reciprocal halt to energy attacks but doubted Moscow would comply; Russia separately said it struck two Black Sea cargo ships. These developments reduce neither trade fragmentation nor European security risk, even if bilateral diplomacy remains open.
China's industrial production beat, but retail sales, fixed investment, credit and M2 disappointed, leaving the regional impulse uneven. ECB officials stressed energy risk and kept future action open. With the Fed hike probability at 97.50%, the ECB at 68.01%, and oil supply risk still active, the dominant regime is defensive, inflation-sensitive and hostile to long-duration assets. A verified Hormuz reopening or a Fed hold would be the clearest route back to risk-on.
The dollar opened firmer on AI-led risk aversion while the US 10-year briefly reached 5%. No new realised US print was supplied, so the live drivers are the FOMC, oil-linked inflation and the durability of the late-session risk recovery.
ING remains constructive USD and sees the FOMC as a monetary-policy lift. MUFG expects a 25bp September hike but warns it may prove a policy error and sees only a 55–60% chance of another move in December; its FX team adds that a hold would damage Fed credibility and the dollar. SEB revised to a September hike after August CPI. Crédit Agricole CIB retains a hold call, arguing the CPI detail and labour reaction function remain less inflationary than the headline suggests. Natixis also reads the CPI upside as concentrated in a volatile component, while Wells Fargo Economics expects the policy projections to carry as much signal as the rate decision.
Fed meeting 15–16 September — Hike 97.50% / Hold 2.50%. Prior (14 September weekly digest): Hike 88.93% / Hold 11.07%. Δ Hike +8.57pp.
EUR weakened against the dollar despite hawkish ECB rhetoric. No realised euro-area print was supplied; German and euro-area ZEW plus Lagarde's messaging are the next domestic tests.
ING favours EUR/USD downside toward 1.1500: the ECB message can slow the fall, but its macro team remains sceptical of further hikes. MUFG says higher rates support EUR while growth is resilient, although three additional hikes may be too aggressive. Crédit Agricole CIB recommends receiving October ECB OIS, directly fading the front-end pricing. UniCredit notes the US and euro-area bond sell-offs share an energy-inflation impulse, while growth and fiscal transmission differ.
ECB 28 October — Hike 68.01% / Hold 31.99%. Prior (14 September weekly digest): Hike 54.90% / Hold 45.10%. Δ Hike +13.11pp.
The CB Leading Index held at -0.1% and sterling traded below 1.3500 before recovering. Claimant count, earnings and unemployment are due today with consensus pointing to softer labour conditions.
Wells Fargo Economics expects the BoE to keep Bank Rate at 3.75%, with higher energy inflation unlikely to trigger an immediate move. World Gold Council reaches the same hold conclusion but expects a hawkish stance. ING argues markets may be assuming a persistently high neutral rate that central banks cannot validate if growth weakens. Crédit Agricole CIB reports fresh GBP selling interest in its flow data.
BoE 16 September — Hold 61.22% / Hike 38.78%. Prior (14 September weekly digest): Hold 70.45% / Hike 29.55%. Δ Hike +9.23pp.
China industrial production beat, but retail sales, fixed investment, M2 and new loans disappointed. That mixed impulse and Hunter's communication sit against still-aggressive RBA pricing.
Westpac restored a November 25bp hike to its base case on stronger domestic demand and data-centre investment, while still arguing RBA leadership would prefer November over September and may wait for quarterly CPI. Crédit Agricole CIB saw fresh AUD selling in its own flows, a useful warning that the otherwise bullish positioning stack is not uniform.
RBA 28 September — Hike 83.89% / Hold 16.11%. Prior (14 September weekly digest): Hike 83.42% / Hold 16.58%. Δ Hike +0.47pp.
BusinessNZ Services rose to 51.2 and visitor arrivals gained 0.5%, but the external backdrop remains fragile because Chinese demand data were mixed and fuel costs stay high.
Westpac upgraded Q2 GDP to 0.2% and sees underlying momentum nearer 0.5%, yet describes the RBNZ stance as balanced rather than aggressively hawkish. It flags election risk, El Niño and high fuel costs. Crédit Agricole CIB says NZD remains the largest G10 short in its positioning model after renewed Risk Reversals selling.
RBNZ 27 October — Hike 61.06% / Hold 38.94%. Prior (14 September weekly digest): Hike 54.23% / Hold 45.77%. Δ Hike +6.83pp.
Headline CPI fell 0.1% m/m, Common CPI missed at 2.6%, core CPI slowed to 0.1%, and manufacturing sales contracted 0.4%. Oil and diplomacy provide a terms-of-trade cushion, not a clean domestic signal.
Scotiabank saw CAD outperform on oil and possible US–Canada détente but warned against overreading trade headlines; it also argued the core CPI detail mattered more than headline CPI. LSEG / Reuters reports that loonie weakness still reflected Fed hike odds after the BoC's hawkish message. Wells Fargo Economics identifies Canadian inflation as the key test for broader energy pressure, while Crédit Agricole CIB saw CAD buying in IMM flows.
BoC 27 October — Hike 62.44% / Hold 37.56%. Prior (14 September weekly digest): Hike 55.66% / Hold 44.34%. Δ Hike +6.78pp.
Revised industrial production contracted 0.2% against a 0.1% forecast. USD/JPY approached 155 before resistance erased most of the move, showing the US-yield channel still dominates the near term.
ING expects a 25bp BoJ hike but sees USD/JPY at 156–157 if a hawkish Fed rebuilds longs or the BoJ fails to validate a fully priced December move. MUFG expects a hike to 1.25% with unchanged guidance and says Ueda must balance further tightening against cumulative economic effects. Crédit Agricole CIB reports tactical JPY inflows, consistent with the large short-covering move.
BoJ 17 September — Hike 77.83% / Hold 22.17%. Prior (14 September weekly digest): Hike 75.00% / Hold 25.00%. Δ Hike +2.83pp.
Swiss PPI jumped 0.7% m/m versus 0.0% expected and -0.1% prior. The surprise raises the inflation tail, but there is little dedicated Swiss macro evidence in the supplied institution corpus.
Crédit Agricole CIB reports CHF selling interest dominated by IMM flows and says the currency is no longer overbought. That flow evidence is directionally bearish, while today's PPI and the new SNB hike tail argue against chasing weakness.
SNB 23 September — Hold 86.89% / Hike 13.11%. Prior (14 September weekly digest): Hold 93.07% / Hike 6.93% / Cut 0.00%. Δ Hike +6.18pp; the current display removes the zero-probability Cut state.
Geopolitical risk offers haven demand, but the 10-year yield touching 5%, a near-certain Fed hike and a stronger dollar keep the real-yield channel dominant.
World Gold Council says Gold is pinched between near-term tightening and medium-term equity and economic risk. It flags support at US$4,250/oz and US$4,231/oz, with a sustained break below US$4,231/oz exposing US$4,203/oz and US$4,149/oz; a close above US$4,538/oz is needed to repair the near-term trend.
Fed-linked distribution — Hike 97.50% / Hold 2.50%. Prior (14 September weekly digest): Hike 88.93% / Hold 11.07%. Δ Hike +8.57pp.
The Saudi East–West pipeline outage, Hormuz vessel restrictions and Yemen spillover keep physical risk elevated, even though diplomacy and improving shipment claims capped Monday's highs.
ING says the Saudi pipeline shutdown lifted oil and that tight inventories leave a thin buffer. World Gold Council highlights rising crack spreads, renewed Chinese imports and dwindling global inventories, arguing higher prices may be required to rebalance demand. Scotiabank attributes the latest 2–3% rise to the pipeline, postponed diplomacy and general regional tension.
No oil-specific policy meeting. Fed-linked distribution — Hike 97.50% / Hold 2.50% versus Hike 88.93% / Hold 11.07% prior; Δ Hike +8.57pp confirms the inflation transmission.
ES fell 0.47% and NQ 0.82% as semiconductor and memory shares led an AI-safety sell-off. The recovery from session lows was constructive, but higher discount rates remain the binding macro force.
LSEG / Reuters reports that software and cybersecurity outperformed as immediate AI-displacement fears eased, but consumer and financial signals remained uneven. UniCredit warns that US state equity participation is concentrated in strategic sectors and may make AI increasingly geopolitical rather than purely commercial. Scotiabank identified AI-investment restraint and higher oil as the joint source of the weak futures tone.
Fed-linked distribution — Hike 97.50% / Hold 2.50%. Prior (14 September weekly digest): Hike 88.93% / Hold 11.07%. Δ Hike +8.57pp.
| Market | Section 2 Bias + Short Summary | COT | Retail Sentiment | Final Bias |
|---|---|---|---|---|
| USD | Hawkish Fed pricing and positive net COT; retail below threshold.Research Score: +1 | +10.69% LongCOT Score: +1 8 Sep +10.69% Long vs 1 Sep +14.26% Long (-3.57pp) | Long 51.9%Retail Score: 0 | Bullish +2 |
| EUR | Hawkish ECB repricing conflicts with ING downside; positioning neutral.Research Score: 0 | -3.53% ShortCOT Score: 0 8 Sep -3.53% Short vs 1 Sep -4.41% Short (+0.88pp) | Long 52.6%Retail Score: 0 | Neutral 0 |
| GBP | BoE hold and softer labour outlook offset positive COT.Research Score: -1 | +10.87% LongCOT Score: +1 8 Sep +10.87% Long vs 1 Sep +13.58% Long (-2.71pp) | Short 52.4%Retail Score: 0 | Neutral 0 |
| AUD | Research, COT and contrarian retail align bullish.Research Score: +1 | +10.93% LongCOT Score: +1 8 Sep +10.93% Long vs 1 Sep +12.68% Long (-1.75pp) | Short 70.1%Retail Score: +1 | Strong Bullish +3 |
| NZD | Neutral research cannot offset net shorts and crowded retail longs.Research Score: 0 | -13.77% ShortCOT Score: -1 8 Sep -13.77% Short vs 1 Sep -20.82% Short (+7.05pp) | Long 81.0%Retail Score: -1 | Bearish -2 |
| CAD | Soft CPI and activity join persistent net shorts.Research Score: -1 | -16.56% ShortCOT Score: -1 8 Sep -16.56% Short vs 1 Sep -20.53% Short (+3.98pp) | Balanced 50.0%Retail Score: 0 | Bearish -2 |
| JPY | Massive short covering neutralises COT; retail shorts support JPY.Research Score: 0 | -9.83% ShortCOT Score: 0 8 Sep -9.83% Short vs 1 Sep -24.81% Short (+14.98pp) | Short 84.7%Retail Score: +1 | Bullish +1 |
| CHF | PPI offsets research weakness, but COT and retail remain bearish.Research Score: 0 | -8.75% ShortCOT Score: -1 8 Sep -8.75% Short vs 1 Sep -7.52% Short (-1.23pp) | Long 71.9%Retail Score: -1 | Bearish -2 |
| Market | Section 2 Bias + Short Summary | COT | Retail Sentiment | Final Bias |
|---|---|---|---|---|
| Gold | Real-yield pressure and crowded retail longs offset Managed Money.Research Score: -1 | +32.82% LongCOT Score: +1 8 Sep +32.82% Long vs 1 Sep +32.94% Long (-0.12pp) | Long 65%Retail Score: -1 | Bearish -1 |
| Oil | Supply research and strengthening Managed Money beat crowded longs.Research Score: +1 | +5.76% LongCOT Score: +1 8 Sep +5.76% Long vs 1 Sep +4.91% Long (+0.85pp) | Long 60%Retail Score: -1 | Bullish +1 |
| ES | Research and Leveraged Funds align bearish; retail neutral.Research Score: -1 | -16.46% ShortCOT Score: -1 8 Sep -16.46% Short vs 1 Sep -15.51% Short (-0.95pp) | Short 51%Retail Score: 0 | Bearish -2 |
| NQ | AI shock and aggressive short build drive the weakest equity stack.Research Score: -1 | -10.80% ShortCOT Score: -1 8 Sep -10.80% Short vs 1 Sep -4.70% Short (-6.10pp) | Short 52%Retail Score: 0 | Bearish -2 |