TMGM Daily Market Breakfast: 2026-08-14

Morning Snapshot

• US producer prices cooled more than expected in July, adding to evidence from the prior day’s CPI data that inflation pressures in the United States are easing.
• Richmond Fed President Thomas Barkin said it remains an open question whether US interest rates are restrictive enough to return inflation to 2% or whether further tightening could still be needed.
• The Federal Reserve halted Reserve Management Purchases after tapering them from $40 billion to $10 billion per month, with TD Securities describing the move as a temporary pause rather than a signal of imminent quantitative tightening.
• Reuters reported that the Bank of Japan is set to raise interest rates as soon as its September 17-18 meeting and could accelerate the pace of increases thereafter, according to three sources familiar with its thinking.
• A separate report said markets are also looking for a September rate increase from the European Central Bank alongside expectations of a Bank of Japan move.
• A senior Iranian Revolutionary Guards official said the Strait of Hormuz is under Iran’s control and management after US President Donald Trump said Washington has total control over the waterway.

Overview

The reporting period was led by US inflation and Federal Reserve developments. July producer price data came in softer than expected, reinforcing the easing inflation picture after the previous day’s CPI release, while Richmond Fed President Thomas Barkin said it remains uncertain whether current policy is sufficiently restrictive or whether another rate increase may still be required. Separately, the Federal Reserve’s decision to halt Reserve Management Purchases drew attention, with TD Securities arguing that the move reflects money market conditions and reserve levels rather than an imminent return to quantitative tightening.

In other central-bank news, Reuters reported that the Bank of Japan is preparing for a possible rate increase as soon as September and may move at a faster pace thereafter, while another report pointed to expectations for both the ECB and the BoJ to raise rates in September. Geopolitically, comments from a senior Iranian Revolutionary Guards official on the Strait of Hormuz kept focus on tensions around a critical global energy shipping route.

Macroeconomics & Central Banks

US July producer prices cool more than expected

Producer inflation in the United States cooled more than expected in July, according to the supplied report, adding to evidence that inflationary pressures are gradually easing after the previous day’s CPI data. The article said the softer PPI reading reinforced the view that price pressures have moderated further during the summer reporting period.

Fed’s Barkin says further tightening remains an open question

Richmond Federal Reserve President Thomas Barkin said it remains uncertain whether the current level of US interest rates is restrictive enough to bring inflation back toward the Fed’s 2% target or whether further tightening could still be necessary. According to the supplied report, Barkin said consumer spending, employment and business investment have remained resilient despite elevated borrowing costs, while noting that there are arguments both for inflation to ease and for price pressures to prove more persistent.

Fed pauses Reserve Management Purchases after tapering

The Federal Reserve halted Reserve Management Purchases after reducing the pace from $40 billion to $10 billion per month. TD Securities said the pause reflects soft money market rates and an ample reserve buffer rather than an imminent restart of quantitative tightening, and noted that the Fed’s implementation instructions still direct the New York Fed to increase System Open Market Account holdings through Treasury bill purchases. TD Securities said it views the halt as temporary and said purchases could resume at a reduced pace later in 2026.

Reuters says Bank of Japan is set for possible September rate increase

Reuters reported that the Bank of Japan is set to raise interest rates as soon as its September 17-18 policy meeting and could accelerate the pace of increases thereafter, citing three sources familiar with its thinking. The supplied report said the shift reflects concern within the central bank over price pressures linked to the Middle East conflict, strong global AI demand and the Japanese yen’s weakness, which has persisted despite the previous month’s rare US-Japan joint currency intervention.

Separate report points to September rate increases from the ECB and BoJ

A separate supplied report said markets are looking for both the European Central Bank and the Bank of Japan to raise rates in September. The article framed the expectation in the context of euro-yen trading and said investors were also seeking fresh cues on whether there could be further joint US-Japan intervention to support the Japanese currency.

Geopolitical Developments

Iranian official says Strait of Hormuz is under Tehran’s control and management

A senior Islamic Revolutionary Guards Corps official, Hossein Taeb, said the Strait of Hormuz is under Iran’s control and management, according to the supplied report. The comments came after US President Donald Trump said Washington has total control over the waterway, keeping attention on competing claims around a strategically important global shipping route.

Scheduled Events

• Bank of Japan monetary policy meeting — null: Reuters reported that the Bank of Japan could raise interest rates at its September 17-18 policy meeting.

Closing Summary

The main developments in the reporting window were softer US producer inflation, continued uncertainty over the Federal Reserve’s policy path, the Fed’s pause in Reserve Management Purchases, reports pointing to possible September rate increases in Japan and Europe, and renewed geopolitical focus on the Strait of Hormuz.