Focus on US CPI inflation

Inflation concerns are resurfacing. Bond yields are rising in several regions, and the conflict between the US and Iran is exacerbating energy market risks and reinforcing expectations of sustained higher inflation. Meanwhile, Ukraine’s increasingly frequent attacks on Russian energy infrastructure are putting further pressure on the global energy supply.

Over the summer, equity markets largely shrugged off higher interest rates and continued to advance. However, rising energy and transport costs remain a clear risk to inflation. In this environment, soft commodities may offer investors some protection. Food prices tend to rise when the cost of agricultural inputs, such as diesel and fertiliser, increases, while supply is relatively inelastic in the short term. Therefore, during geopolitical or weather-related supply shocks, the price of soft commodities can rise even when equities and bonds are under pressure. However, commodities are not a straightforward inflation hedge. Individual markets are highly volatile and can fluctuate significantly for reasons unrelated to the broader price level.

Cocoa catches a weather bid
Cocoa prices have roughly doubled since the spring lows. Heavy rainfall and flooding in Côte d’Ivoire and Ghana have raised concerns about damaged trees and disrupted farms, and the spread of black pod disease. Traders are also increasingly factoring in the risk of a strong El Niño event, which could lead to drier conditions and delayed rainfall to West Africa. The region accounts for around two-thirds of global cocoa production, meaning that weather expectations there significantly influence on futures prices. Further momentum was added by extensive short covering after the sharp price drop at the beginning of 2026.

Although supply is improving, risks remain
The price of cocoa has recently fallen. According to Trading Economics, by 30 August, farmers in Côte d’Ivoire had shipped 2.14 million tonnes of cocoa to ports, which is 19% more than during the same period the previous year. Meanwhile, exchange inventories have also risen, with ICE-monitored cocoa stocks reaching approximately 3.41 million bags — the highest level in two years.

Nevertheless, the risk of adverse weather is far from over. The World Meteorological Organization recently stated that there was an 'exceptionally high likelihood of nearly 100%' that El Niño would persist until February 2027. Cocoa production is labour-intensive, but higher fuel and fertiliser costs could put further upward pressure on prices. Although the recent pullback may present an attractive entry point, cocoa remains a high volatile market, with prices driven by weather, supply data and positioning.

Tensions between Iran and the US escalated last week. Over the last week, the price of Brent crude oil increased by almost 4%, reaching $98 per barrel at the time of writing, and by 20% over the last month. Meanwhile, interest rates around the world continued to rise. However, since reaching its latest peak on 13 August, the S&P 500 index has only declined by just 1%.

On Friday 4 September, US non-farm payrolls came in at 162,000, compared to an expected figure of 55,000. This strong employment figure has heightened market concerns about a potential interest rate hike by the Fed. The market is now awaiting this week's crucial inflation data in the form of the US Consumer Price Index for August (see the five-year monthly graph below).

Prior to the release of US jobs data on Friday, the probability of a Federal Reserve interest rate hike by the Federal Reserve at its upcoming policy meeting on 16 September was 54%. This figure then rose momentarily to 62%. Meanwhile, the US dollar strengthened, and the stock market fell slightly. By Monday morning, 7 September, the likelihood of a US interest rate increase at the next Federal Reserve meeting had fallen to 60%.

Calendar

On Wednesday, 9 September, an interim report from the Spanish retail company Inditex. At 19:00 CET is expected, Apple will hold its annual product launch event. In terms of macroeconomic news, the day will begin with the release of China’s consumer and producer price indices for August. The US Department of Energy's weekly oil inventory data will also be received this week.

The release of macroeconomic data begins on Thursday, 10 September, with the publication of the Consumer Price Indices for August in Germany and Norway. Sweden’s GDP, industrial orders and household consumption figures for July are also expected to be released at the same time. OPEC will publish its monthly oil report, and the ECB will announce its interest rate decision. Next, turning to the US, where data on weekly jobless claims, existing home sales, the producer price index for August and wholesale inventories for July will be released.                     

The release of macroeconomic statistics will begin on Friday 11 September with Japan's producer price index for August. This will be followed by the UK's GDP and industrial production figures for July. The IEA will then publish its monthly oil market report, after which the most important figure of the week will be released: the US consumer price index for August. The day will end with the release of the Michigan index for September, also from the US.

The S&P 500 is consolidating and continues to struggle to find direction. Support is found around 7,600 on the downside, while resistance lies between 7,750 and 7,800. Although the MACD remains positive, it is signalling fading momentum, suggesting that the balance of risks is tilted to the downside. Breaking below 7,600 could open the way to the next support zone, which lies between 7,480 and 7,500.

The Nasdaq-100 is also consolidating but is currently approaching the upper resistance level of around 29,565. Breaking above this level could pave the way to the next resistance level, which is around 30,200.

As the chart below shows, the OMXS30 bounced convincingly off its MA50 yesterday and closed well above its MA20. The index now appears ready to revisit its previous high of around 3,330. However, although the MACD remains positive, it is also signalling fading momentum.

The German DAX, on the other hand, looks less bullish. Momentum is fading and the index is currently testing the support level between its MA50 and 25,900. Breaking below the MA50 could open the way to the next support level at 25,390.

EMA 9: 9-day exponential moving average

Fibonacci: There are several Fibonacci lines used in technical analysis. Fibonacci numbers are a sequence in which each successive number is the sum of the two previous numbers.

MA20: 20-day moving average

MA50: 50-day moving average

MA100: 100-day moving average

MA200: 200-day moving average

MACD: Moving average convergence divergence