Edward Meir's week in review and thoughts for the week of Aug. 17, 2026

Meanwhile, sporadic attacks on vessels in the region continue. The Abu Dhabi National Oil company said two of its vessels were attacked while transiting the Strait of Hormuz on Thursday and another was hit on Friday. Also last week, four sailors were killed after an attack by Iran-backed Houthis on a cargo ship in the Bab el-Mandeb strait. One of Yemen’s ports (in an area of the country not controlled by the Houthis) is now also closed because of the fighting. On the US side, a Navy helicopter struck the rudder of a Panamanian container ship attempting to sail toward an Iranian port, all of which remain blockaded.

Talks are said to continue behind the scenes, but we have yet to sense any progress. In this regard, the Pakistani Defense Minister said the US and Iran were close to “some sort of an arrangement,” but that could be a stretch given the categorical denial by the Iranians they are talking to the US at all. More promising are reports of a possible agreement between Iran and Oman on a “shipping map” that would enable the two countries to manage traffic in the Gulf going forward. The US is not involved in these talks and will likely reject the terms if they do not restore free passage to the Strait.

Metals

In the base metals space, the complex ended mixed. Copper ended 0.7% higher on the week on a Bloomberg report that shipments from the giant Grasberg mine in Indonesia were halted because of a boiler leak. An assessment will be made, followed by subsequent repairs that could see the outage last for at least several more weeks. We expect this latest supply glitch to provide an ongoing element of support for copper going forward as several other producers are experiencing issues as well. In Chile for example, the country’s copper agency Cochilco has Chile’s copper production falling by 2.6% this year as facilities owned by Codelco and BHP are both falling behind on their output targets.

Aluminum ended down 1% on the week on reports that supply concerns out of the Gulf are easing. Here, Emirates Global Aluminum announced it aims to restore production to pre-war levels by Q1’27. However, this is not going to change anything in the near-term where LME inventories are hovering around record lows with little sign they are going to rebuild anytime soon.

Nickel prices ended about 1.1% lower on the week on expectations that Indonesia could increase mining quotas. (Indeed, as we reported last week, one large miner already obtained a much higher quota.)

Zinc prices increased by 1.5% on the week and remains very firm for no underlying reason that we could see. Tin ended 1.2% higher, while lead finished flat.

In the ferrous space, US steel prices continue to move higher. In precious metals, gold and silver ended slightly higher last week on little news, but a flat dollar index and falling US interest rates likely helped sentiment.

Stocks

Outside of the commodity markets, the stock market finished with only modest changes as favorable inflation data (more on that later) helped offset pressure from rising oil prices. The S&P 500 gained 0.4% on the week and reached fresh record highs. The NASDAQ added 0.1% as a number of chip stocks recovered. The Dow was the only laggard, ending down 0.6%.

US treasuries ended mixed on the week. The 2-year note ended down 4 basis points, but the 10-year and the 30-year settled up 4 and 5 basis points, respectively, at just under 4.7% and 5.25%. The odds for a Fed move are falling sharply, hovering around 32% compared to 55% a week ago.

Two of the three main US inflation indices (the consumer and producer readings) came out last week and were generally reassuring. July producer prices came in unchanged for the month, following a 0.1% decline in June. Goods prices fell by 0.7%, while energy decreased by 3.1%.

Excluding food and energy, goods prices were up by a scant 0.1%. On an annualized basis, PPI increased by 4.7% after advancing 5.5% in June. Notably, Reuters points out that “most of the PPI data [was] collected early in the month, meaning that sharp oil price increases toward the end of July were probably not reflected ….[and] as such, economists expect higher PPI readings in August.”

If we do get the inflation push into August, the odds for a rate increase for September will increase.

July CPI numbers came in pretty much in line with estimates. Prices increased by 0.1% m/m following a 0.4% decrease in June. Core CPI increased by 0.2% after an unchanged reading in June. The annual CPI reading came in at 3.4%, slightly lower than June’s 3.5% reading, while the annualized core came in at 2.5% from 2.6% seen in June.

Macro readings and other news from the past week

• July retail sales fell for the first time in nine months. “This, together with a weaker jobs report and subdued core CPI inflation, raises the odds of the FOMC staying patient again in September,” an economist at BMO told Reuters. But we think the August inflation numbers will likely be the deciding factor. Sales dropped by 0.6% after a 0.2% gain in June. There was a 2.2% decrease in sales at nonstore retailers. Receipts at motor vehicle and parts dealers dropped by 1.8%. Sales of electronics/appliances dipped by 0.5% while receipts at service stations dropped by 0.9%, reflecting lower gasoline prices. Sales at clothing stores rebounded by 1.9%, boosted by back-to-school shopping.
• US existing home sales fell for a second straight month in July, dropping by 1.7% to an annual rate of 4.06 million units, but coming in line with estimates. Existing housing inventory decreased 1.9% month over month to 1.54 million units and was down 0.6% from a year ago. The median existing home price increased 2.0% from a year ago to $434,100. Home sales fell in the Midwest and in the South last month, rose in the Northeast and were unchanged in the West.
• In trade news, President Trump signed a proclamation last week imposing 100% tariffs on imports of Chinese drones and their components. The order imposes a 100% tariff on drones of a certain size that are deemed particularly sensitive for national security purposes. A 15% tariff will be imposed on drones and components from the EU, Japan, South Korea, and Taiwan, among others, but the move against Chinese imports will be the most significant.
• Separately, Reuters cites a Globe and Mail report as saying “Canada is considering a proposal to accept US auto tariffs in return for a reduction on levies for vehicles compliant with the US-Mexico-Canada Agreement. The proposal would maintain an exemption for the value of American content in cars exported from Canada.
• The Department of Commerce issued preliminary anti-dumping duties covering van-type trailers and certain sub-assemblies from Mexico and Canada. Duties will range anywhere between 3% to 8% depending on the origin and manufacturer.
• China’s new yuan loans posted a record contraction in July, down by about $50 billion. Reuters notes “Chinese banks typically slow lending after front-loading credit ahead of the end of the June quarter.” Still, the drop is significant and even the year-to-date loan figures (through end-July) are hardly much better — down 15% year over year.
• Indonesia is trying to force companies exporting its commodities (including nickel) to use a proposed domestic exchange in hopes this would somehow achieve higher prices for its products. Rules for the new bourse will be introduced by mid-September, but past efforts to launch domestic exchanges have floundered. Indonesia’s tin exchange is something of an exception but has succeeded more in determining export allocations as opposed to “setting” prices.
• As LME copper inventories fall, COMEX/CME stocks continue to build. Reuters reports inventories on the CME were up for 36 straight days as of Friday to a record 658,000 tons. Meanwhile, we still have heard nothing with regard to copper cathode duties. Our guess is, given the Trump administration’s strong preference for tariffs, a 15% duty will likely be imposed but the start date will be delayed. We think the administration will justify the duty as being needed to speed up refinery construction.
• We have gotten a number of supply/demand estimates for the oil markets going forward. The IEA said last week it sees overall supply falling by 4.3 million barrels per day (bpd) this year compared with a 3.7 million forecast put out in July. The IEA has global oil supply at around 1.27 million bpd below demand, which, in our view, is not a huge deficit considering roughly 6 million bpd of Middle Eastern production remains offline. Obviously, other countries have done a good job of ramping up output to fill the void. The 2027 crude deficit could increase to 4.6 million bpd, the IEA noted, but we suspect this forecast assumes the conflict grinds on.
• For its part, the US’ EIA expects a much smaller crude oil deficit of about 600,000 bpd for both this year and next. The agency sees global output of 100.8 million bpd, roughly unchanged from its previous number, and sees world oil demand coming in at 102.7 million bpd. Importantly, the EIA notes recent threats to ships moving Saudi oil through the Bab El-Mandeb have not resulted in any crude shut-ins. It sees WTI prices averaging just under $81 for 2026, up by about $5.10/barrel from its previous estimate. And finally, OPEC lowered its forecast for world oil demand in 2026 to 580,000 bpd, marking the fourth straight downward revision. However, the cartel raised its oil demand forecast for 2027.
• Japanese business confidence improved in August, according to the latest Reuters Tankan survey. The manufacturers’ sentiment index rose to 18 in August from 13 in July, marking the highest level since March. Semiconductor-related industries were the primary driver behind the increase. Separately, non-manufacturers’ confidence climbed to 28 from 25.
• Chile’s Cochilco has raised its forecast for the average copper price in 2026 to $5.95/pound and kept its 2027 estimate at $5.10/pound. Global copper demand is forecast at 27.8 million tons in 2026, up 1.9% y/y, led by China, where consumption is seen rising 2.7% y/y to 16 million tons.
• Century Aluminum expects the US government to approve a reduced tariff rate of 25% on its aluminum import needs for its Oklahoma smelter joint development project with Emirates Global Aluminum. “We expect the Oklahoma project to be approved under the program to import up to 750,000 metric tons at the reduced 25% rate (from 50%) beginning in 2027,” Century’s CEO told Reuters. However, the Century/EGA collaboration still has to secure power for its new facility and remains in negotiations with utilities. Those talks are likely difficult given that data smelters are outbidding their competitors for power at this stage. Century’s CEO also added he anticipates a global aluminum deficit of 1 million tons in 2026, with shortfall conditions continuing into 2027.

This week’s US macro readings

It will be a very quiet week in terms of US macro readings.

• Monday, we get the August Empire State manufacturing index and the NAHB August market index.
• Tuesday brings us housing starts, industrial production and pending home sales — all for July.
• Wednesday brings us the Fed minutes, while on Thursday, we get the Philly Fed business outlook survey and weekly initial claims.
• Friday brings us the latest S&P Global flash readings for both US manufacturing and services.

We wish all our readers all the best for the upcoming week.