WS #13925

The July CPI report matched expectations at 3.4% YoY, with core at 2.5%, reinforcing the Fed's likely hold in September (odds now ~55%). This is a stable, non-surprising data point that supports the prevailing 'soft landing' narrative. However, the oil market remains the dominant risk: the EIA reported a massive 17.4M barrel crude inventory build (vs. expected draw), yet Brent is at $89.44 and WTI at $83.8, with the Strait of Hormuz still closed and Iran's SNSC chief stating it will remain closed until US meets conditions. This is a counter-signal to the inventory build, suggesting geopolitical risk premium is overriding physical oversupply. Additionally, Ukraine has halted drone strikes on Russian oil tankers at US request, a de-escalation that could ease supply concerns, but Russian strikes on Odesa port continue, and freight costs for Black Sea-Mediterranean routes hit records. The AI infrastructure theme remains robust: Super Micro Computer beat Q2 EPS massively and raised FY27 revenue guidance to $65-72B (vs. $53.1B consensus), CoreWeave and Nebius also beat, and Lumentum raised guidance, driving the optical-networking trade. Google's Pixel 11 launch highlights a memory shortage that is raising consumer electronics prices, which could pressure AAPL margins. The Lakers sale to Kushner/Iger for $12B is a notable M&A event but has limited market impact beyond MSGS. Overall, the market is in a 'risk-on' mode with tech leading, but oil and geopolitical headlines could quickly shift sentiment.