Gasoline drove August inflation while underlying prices slowed, and oil fell back below $100

Methodology note: Morning report, generated before the September 11 US open. Sources cited inline.

Gasoline Carried August's Inflation While Core Slowed, And Crude Fell Back Under $100

August consumer prices rose 0.4% from July and 3.4% over twelve months, both in line with consensus, and gasoline alone accounted for more than a third of the monthly increase. Underneath it, core prices excluding food and energy slowed to 2.4% over the year from 2.5% in July, while the energy index ran 16.3% above a year ago. The inflation in this print is energy. That input started reversing the same morning: WTI fell back under $100, to $99.23, on a report that Middle East foreign ministers are negotiating a temporary arrangement for shipping through Hormuz. The market goes into Wednesday's decision pricing roughly 70% odds of a hike built on a barrel now moving the other way.

• The all items index rose 0.4% in August after 0.1% in July and 3.4% over twelve months, with gasoline up 3.9% and accounting for over a third of the monthly increase, while core slowed to 2.4% year over year from 2.5% — headline in line and core decelerating places August's acceleration in the energy line rather than in the underlying price level
• The energy index ran 16.3% above a year earlier and food 2.7% — a 16% energy contribution inside a 3.4% headline is the arithmetic that makes this print hostage to one input, and the same arithmetic works in reverse if crude stays where it is this morning
• WTI fell 2.17% to $99.23 and Brent 3.58% to $103.78 after a report that Middle East foreign ministers are working on a temporary deal with Iran to manage shipping through the Strait of Hormuz, leaving crude up about 9% on the week — the level last night's report named as what would take the energy input out of the rates move traded within nine hours of it being written
• CME FedWatch showed futures pricing roughly a 71% probability of a quarter-point increase on September 16 — that pricing hardened on PPI's energy line rather than on core data, which leaves it exposed to the same barrel that is now falling
• Treasury bought $5.187 billion of the $6 billion offered in ten- to twenty-year off-the-run paper on Thursday, and the ten-year yield rose to 4.954% after the operation, its highest since October 2023 — a mechanical bid underneath a long end that sold anyway is evidence about demand rather than about flow
• US retail diesel hit a record high this week, above the 2022 peak, with distillate stockpiles at their lowest level on record for the time of year — the refined product that actually reaches consumer prices is not following crude down, which is the argument against reading a sub-$100 barrel as the end of the energy input

September 11, 2026 Pre-Market

What changed since last report

• The invalidation level traded. Last night's report named a WTI settle back under $100 as what would take the energy input out of the rates move, and crude is at $99.23 nine hours later. The qualifier matters: that is an intraday price on a negotiation report, not a settle, and the week still ends about 9% higher than it began.
• The data arrived without the input inside it. August CPI covers a month that closed before this week's crude move, which is how gasoline at 3.9% could carry a third of the monthly increase while core slowed to 2.4%. Both the hot line and the cool line are backward-looking relative to the barrel the market is actually trading.
• The long end took a buyback and sold anyway. Treasury bought $5.187 billion of the $6 billion it offered in ten- to twenty-year paper on Thursday, and the ten-year rose to 4.954% after the operation rather than before it. The expanded program runs at a minimum of $4 billion per operation through November 4, so this is a repeatable test rather than a single reading.
• The levels. 4.818% on the ten-year is support beneath this morning's 4.94%; 5.44%, the 2007 peak, is the level above Thursday's 5.37% close on the thirty-year.

Movers

• Oracle: traded near $162.65 in premarket, about 6% above Thursday's $152.94 close, after first-quarter cloud infrastructure revenue rose 121% to $7.4 billion and remaining performance obligations reached a record $664 billion. The recovery is measured from a 5.38% regular-session decline, so the round trip is the story rather than the direction.
• Nvidia: closed down 2.4% at $218.36 on Thursday after the Justice Department opened a review of whether the $20 billion licensing agreement with Groq was structured to avoid antitrust reporting, an inquiry that dates to December but has now produced a formal request for information. The deal moved Groq's chief executive and operating officer to Nvidia while leaving the entity nominally independent, which is the structure under examination.
• Adobe: slipped about 2% after hours to $243.50 despite third-quarter revenue of $6.76 billion and non-GAAP earnings of $6.13 a share, both above estimates, with AI-first annual recurring revenue above $650 million and growing more than 150%. The company also named Anil Chakravarthy chief executive effective December 1.

What to watch

Where the reaction sits on the curve. A print whose core slowed while gasoline carried the headline gives the front end and the long end different instructions. Hike odds holding above 60% with the ten-year back under 4.90% would say the market is treating the energy line as something the Fed offsets rather than something it chases; both rising together says the opposite. It resolves inside the first hour.

Whether WTI settles under $100. The intraday break is not the signal last night's report named — the settle is. A close under $100 with diesel still at a record would separate the crude premium, which a Hormuz arrangement can remove, from the refined product cost, which it cannot. The Iran–Oman transit route remains the identified catalyst and carries no fixed date.

Preliminary September consumer sentiment at 10 a.m. August put the index at 51.7 with year-ahead inflation expectations at 4.0% and the long-run measure at 3.3%. September is the first survey taken across $100 crude and record diesel. A year-ahead reading back toward July's 4.2% would matter to a committee that has cited anchored expectations as the reason an energy shock can be looked through.