〔Overnight Brief〕September Hike Odds Halve to ~35% as PPI Cools and StanChart Says No 2026 Hikes — Goldman Lifts FTSE/Stoxx Targets While Bonds Stay Hard to Trade

0. Overnight Arc

The week's Fed repricing continued overnight: July PPI cooled more than expected, and September hike odds dropped from about 50% to roughly 35% ^[1]. Standard Chartered declaratively rules out any 2026 hike and sees the dollar under mild downward pressure ^[2]. But the rates side remains messy — mortgage rates ticked higher after Retail Sales despite sitting near four-week lows ^[3], and trend-following signals in bonds are struggling ^[4]. Next focus: Jackson Hole, where TD Securities expects a communication reset ^[5].

1. Fed and Policy Debate

• **[NEW] July PPI:** headline +4.7% y/y (down from 5.5%), m/m 0.0%; core +4.2% y/y, +0.2% m/m — no broad inflation acceleration ^[1].
• **[NEW] Market pricing:** September hike odds now around 35%, down from ~50% earlier this week ^[1].
• **[NEW] Standard Chartered:** the Fed will not hike for the rest of the year; market reaction may lag; USD faces mild downside pressure ^[2].
• **[NEW] Nordea:** labour strength supports further hikes ^[6].
• **[NEW] TD Securities:** look for a communication reset at Jackson Hole ^[5].
• **[NEW] Breakingviews:** a memo to CEOs telling them to take the Fed's cue on forward guidance ^[7][8].

2. Rates, Mortgages and Housing

• Mortgage rates ended Friday just a hair higher than Thursday, but aside from yesterday afternoon they remain the lowest in four weeks, back to July 17; the uptick followed this morning's Retail Sales report ^[3].
• Retail Sales is ranked by CME as the 5th most impactful data release, ahead of CPI, PPI and PCE, yet the reaction was hard to interpret ^[9].
• MBA mortgage applications rose 3.6% seasonally adjusted in the week ending August 7; purchase apps +3% w/w but -1% y/y ^[10].
• NAR existing-home sales slipped 1.7% m/m to 4.06 million SAAR in July but are +0.7% y/y; Lawrence Yun: 'Home sales have been remarkably stable' despite rising rates ^[11].

3. Equities and Cross-Asset Positioning

• Goldman Sachs raised its 12-month FTSE 100 target to 11,400 from 11,000 ^[12] and lifted the Euro Stoxx 600 target to 695 from 660 ^[13].
• Morgan Stanley's Mike Wilson, chief US equity strategist and CIO, tells long-term investors to avoid being shaken out ^[14], says chasing stocks is as damaging as selling at the bottom ^[15], and notes retail investors do a 'bad job' rebalancing ^[16].
• AlphaSimplex's Kathryn Kaminski says the bond market has been difficult to trade from a trend perspective even as stocks sit at all-time highs ^[4].
• JPMorgan remains bearish on the yen over the medium-to-long term and kept its USD/JPY target at 164 ^[17].

4. China and Geopolitics

• PBOC: on August 14, conducted 1 trillion yuan in 6-month outright reverse repos (same-scale rollover) and, for the first time, a 349 billion yuan overnight reverse repo during the mid-month tax period — net injection of 348 billion yuan ^[18].
• US President Trump signed a proclamation imposing 10-100% ad valorem tariffs on imported drones and parts, citing national security ^[1][18].
• Middle East: US defense secretary says a naval blockade could last 'unlimited' time; Iran's senior official warns of escalation; Houthis again attacked a Saudi refinery; the US plans to replace the overextended USS Lincoln with USS Washington ^[18].
• China July money data: M2 +7.7% y/y, M1 +4%; January-July cumulative social financing new credit was 1.74 trillion yuan less y/y ^[19].
• Samsung and Broadcom signed an MoU to expand memory and foundry cooperation, targeting over $200 billion in value by 2030, with Samsung supplying HBM and 2nm-class advanced nodes ^[20].
• Century Securities notes last week's A-share rebound: Wind All-A +5.37%, ChiNext +6.55%, STAR50 +6.61%; stock ETFs saw net outflows of 76.3 billion yuan ^[21].