Edward Meir's week in review and thoughts on the week of Sept. 8, 2026

Over the weekend, US naval forces struck three Iranian tankers, including one off the coast of Kharg Island. This was in response to attempted Iranian attacks on US Navy ships. Iran’s IRGC also said it targeted three oil tankers that were traveling “unauthorized” routes through the Strait.

Marisks, a maritime intelligence firm, noted “commercial tankers are now being deliberately used as instruments of reciprocal economic pressure, substantially weakening the previous distinction between military confrontation and commercial shipping.” Meanwhile, only 10 ships transited the Strait over the past 10 days, the lowest since May. The full count may be higher given discrete voyages made with transponders switched off and informal protection offered by the US Navy.

Oil

Not surprisingly, Brent crude prices tacked on nearly 8% last week while WTI gained about 10%. Citi raised its average Brent price forecast for Q3 to $86/barrel from $80, saying the reopening of the Strait of Hormuz was taking longer than previously expected. ANZ also raised its short-term Brent number to $95 a barrel. Prices are up by another $1.20 basis Brent (post-Labor Day).

Concerning as the rise in crude oil is, the situation in diesel is much worse. Diesel prices are at record highs, hitting an average of $5.85/gallon Friday, from $3.71/gallon a year ago. Gasoline prices were also up last week, but unlike diesel, they have not risen as much. Farmers will experience the diesel hit particularly hard as harvest season gets underway, while homeowners will not be far behind when colder weather sets in.

Diesel supplies are being pinched on a global level as well given that a number of Russian refineries have been disabled after coming under attack by Ukrainian drones. In fact, over the weekend, the Wall Street Journal reported that US energy executives estimate roughly 5 million barrels of the world’s refining capacity is offline. California alone has lost 17% of its capacity through closures and regulatory obstacles.

This past week, Trump urged a gathering of refining executives to do more to bring prices down, but building new multi-billion-dollar projects will take time and won’t resolve the short-term crisis. There is also talk of a US export ban on diesel, but the energy secretary does not seem to favor the idea. Many US refineries are scheduled to undergo maintenance in the fall, including a large refiner in Canada, taking even more processing capacity offline, and ensuring product prices will remain elevated.

Refiners, of course, could not be more pleased with their margins. The diesel crack is at a record $100/barrel while shares of oil majors and refiners are soaring on Wall Street.

Metals

Outside of crude, other markets finished mixed. In base metals, copper and tin finished up by nearly 1% each, while aluminum and zinc were up by 1.6% and 1.8%, respectively. Nickel and lead were the two laggards, finishing down on the week. Tight inventories are giving base metals considerable support, except for nickel and lead, the two complexes that are the most comfortably supplied.

LME markets were open Monday and finished generally higher. Three-month LME copper prices were the stand-out, hitting record highs and matching the previous records set by LME cash and CME prices.

In the precious metals group, we saw considerable volatility set in over gold, with the complex wrapping up the week with a modest 1.4% decline. A strong US jobs report on Friday boosted US treasury yields and the dollar, trimming gold’s earlier gains. Besides gold, silver, platinum, and palladium, all finished with weekly declines as well.

Stocks

In the US equity markets, all three major US indexes closed just about flat with last week despite rather intense volatility underneath the surface. Technology and energy stocks were the best performers, while consumer discretionary names fell by 2%, while materials (-1.6%), real estate (-1.3%), and industrials (-1.1%) also posted sizable losses. The financial sector finished unchanged. Semiconductors were clear out-performers last week but still remain down around 18% so far in Q3.

Treasury yields finished the week on a higher note. The 2-year note yield settled at 4.38% (up 3 basis points on the week), while the 10-year yield settled up at 4.78% (up 6 basis points on the week). Despite higher yields, the general dollar index finished lower on the week as investors remain concerned about whether both the Treasury and the Federal Reserve are adequately geared up to fight what looks like to be a troubling revival in the US inflation picture.

Macro readings and other news from the past week

• The most important release of the week was Friday’s August non-farm payroll number, which came in at a higher-than-expected 162,000 jobs (consensus 53,000). The prior reading was revised to +21,000 from -23,000 as well. August unemployment came in unchanged from the prior month at 4.1%, while average hourly earnings clocked in at 0.3% (consensus 0.2%). Food services and drinking establishments were a standout last month, adding about 59,000 jobs, more than recouping the 17,000 jobs shed over the prior two months. Local government gained 42,000 jobs after losing 58,000 jobs in July. Manufacturing also added to payrolls, as did healthcare, but information and finance sectors lost jobs. Despite a low unemployment rate, only 34% of respondents surveyed by a recent poll said it was a good time to find a quality job.
• While the strong payroll number suggests the Fed could consider a September rate hike more favorably, we are not sure that alone will do it. Fed Chair Warsh frequently points out the central bank will not pay more (or less) attention to just one data point. In the case of the payroll numbers, the Fed will likely look at the three-month average gain for jobs. These are running at a fairly modest 71,000, and so seen in this context, the most recent numbers are not necessarily a game changer. On a related item, the August ADP number came in at 38,000, shy of the 47,000 expected and also below the 46,000 seen in July. The July job openings report (JOLTS) came in at 7.27 million (prior 7.18 million) and was not a particularly big surprise.
• The August ISM manufacturing index came in at 54.6%, slightly below the consensus reading (55.3%) as well as the prior month (55.6%). Still, the index is solidly in expansion territory as most categories showed ongoing growth. The notable exception was input prices, which increased at the same pace as the prior month. In fact, respondents cited higher steel and aluminum prices as being issues, with steel also mentioned among materials in short supply.
• July factory orders rose by 0.9% after declining by 0.2% last month. Although business spending was flat, this was likely a normal slowdown after the solid increases registered in May and June. Motor vehicle parts and trailer orders rose 0.4%, while machinery orders were up by 0.8%. Orders for computers and electronics dropped 1.1%, although they were still up 14% y/y. Orders for non-defense capital goods excluding aircraft – a measure of business spending – came in unchanged.
• Federal Housing Finance Agency Director Bill Pulte said Thursday he directed Fannie Mae and Freddie Mac to support the housing market more aggressively, in part by approving all lenders to use the credit scoring system VantageScore so as to expedite processing.
• The July US trade balance came in at -$88.6 billion from last month’s -$71.2 billion. The widening deficit will likely be a drag on Q3 GDP numbers, assuming that other variables do not compensate.
• Q2 productivity came in at 1.4%, unchanged from the previous month. Q2 unit labor costs rose by 1.2% and so rising productivity should help keep labor-induced inflation pressures in check.
• The August ISM services index came in at 55.4%, higher than the 54.1% seen in July. However, here too, input prices have pushed up (to four-year highs) as service providers report they see increases in both materials and service costs. On the positive side, new orders increased to 60.9, their strongest reading since February 2023, but employment remained in contraction mode.
• China’s manufacturing PMI (compiled by S&P Global) rose to 51.5 in August from 50.9 in July. New orders and exports both accelerated. However, the government-compiled official index came in at 49.8 from 49.2 in July and remains mired in contraction territory. “Domestic demand seems to be coming back, although it’s more likely to have been driven by AI and exports than by policy expansion,” a senior economist at the Economist Intelligence Unit told Reuters. China’s non-manufacturing services PMI remains unchanged at 49, matching the July reading and hovering at a four-year low.
• Japan’s manufacturing sector picked up in August, with the PMI rising to 54.9 from 54.5 in July, its highest reading since April. Japanese export orders also increased at the quickest pace in six years, prompting manufacturers to raise staffing needs for a 20th consecutive month. Japanese firms are more optimistic about the year-ahead outlook, with confidence now at a six-month high.
• In Europe, the region’s manufacturing sector expanded at its fastest pace in more than four years in August with general business confidence among manufacturers also up for a fourth consecutive month. S&P Global’s index rose to 52.7 in August from 51.9 in July, its highest since May 2022. New orders grew at their sharpest rate since early 2022, while factory output came in at a 54-month high. Reuters notes, “intermediate goods such as chemicals, metals and electronic components were the biggest driver of production gains.” A senior economist at S&P Global told Reuters, “August’s PMI data puts the Euro area on track for a solid quarter of growth in Q3. Momentum in the industrial economy has picked up nicely and the service sector has shaken off the initial weakness seen after energy prices surged at the start of the Middle East war,” he was quoted as saying.
• Separately, a S&P Global reading showed growth in Eurozone services, falling to 51.6 in August, a two-month low, but still in growth territory.
• Germany’s Ifo Economic Institute expects GDP growth of 1.4% in 2026 and 1.2% in 2027, up from its previous forecast of 0.8% for both years. The Institute said government spending would contribute to more than half the growth this year, with the balance coming from a pickup in industrial production and exports. Ifo noted higher energy prices will likely keep household consumption subdued and push inflation to 2.8% this year and to 3.0% in 2027.
• The UK was something of an outlier. Manufacturing growth slowed in August to its weakest level since March, with the PMI index slipping to 51.7 in August from 51.9 in July.
• Volkswagen approved a sweeping restructuring plan that will eliminate 50,000 additional jobs worldwide on top of the 50,000 layoffs already under way. The company says its European factories have more than 500,000 vehicles of excess capacity. Alternative uses are being considered for several German plants facing phaseouts. US tariffs, excess capacity and intensifying Chinese competition are among the reasons behind the overhaul.

This week’s US macro readings

• Tuesday we get the NFIB small business optimism index for August, coupled with the July consumer credit reading (last $14.2 billion).
• Wednesday nothing comes out.
• Thursday brings us weekly jobless claims (expected at 208,000, last 206,000), followed by August producer prices (expected at 0.4%, last unchanged). The year-over-year PPI is expected to come in at 5.3% (last 4.7%) while the monthly core PPI is expected to come in at 0.3% (last 0.2%). August existing home sales also come out on Thursday (expected at 3.9 million annualized, last 4.1 million).
• Friday brings us the August CPI reading (expected at 0.4%, last 0.1%) while the year-over-year reading is expected to come in unchanged from the month prior at 3.4%. The core m/m reading is expected to come in unchanged at 0.2% as well, while the y/y increase is forecast to come in at 2.4% (last 2.5%). Finally, we get the University of Michigan preliminary consumer index (expected at 52.3, last 51).

We wish all our readers well for the upcoming week.