Fed Minutes and PMI Take Center Stage, Hormuz Situation Influences Oil Prices and Global Risk Appetite

On August 17, the market will welcome the Federal Reserve's July meeting minutes, August PMI, and earnings reports. Recently, the U.S. CPI, PPI, and retail sales data have been weak, leading to a reduction in the market's pricing for a September rate hike by the Fed to about 27%. Goldman Sachs also believes that a rate hike in September is "highly unlikely," easing short-term interest rate pressures. However, the FOMC minutes will still need to be observed for officials' attitudes toward inflation and energy prices. If the minutes signal a strong hawkish stance, interest rate expectations may be repriced.

On the other hand, whether commercial shipping can truly resume in the Strait of Hormuz will directly impact oil prices and inflation expectations. Reports indicate that Iran and Oman have made progress on shipping routes, but the actual shipping volume remains far below normal levels. Therefore, this is still considered diplomatic progress rather than a resolution of supply risks. If shipping continues to recover, the risk premium for crude oil is expected to decrease; conversely, if negotiations stall or maritime conflicts escalate, rising oil prices will increase global inflation and interest rate pressures.

At the same time, U.S. stocks remain at high levels, but there are signs of localized weakness in U.S. consumer spending. This week's earnings reports will further validate consumer resilience. Currently, the biggest contradiction in the market is that corporate profits remain strong, but high oil prices, cooling employment, and living costs are compressing the spending capacity of some consumers. If consumer spending remains resilient, AI and corporate profits can still support U.S. stock valuations; if consumer spending deteriorates further, the market will reassess the sustainability of corporate profits and high valuations.

Overall, the core of the market this week is not solely about expectations for rate hikes or cuts, but whether the easing of monetary policy pressures can offset the capital cost pressures created by energy prices, fiscal financing, and long-term interest rates. The FOMC minutes, PMI, retail earnings reports, and the shipping situation in Hormuz will collectively determine the capacity of risk assets in a high-valuation environment.