A week that starts at record highs, with CPI as the first gate

Good morning. U.S. markets were closed over the weekend, so let's set the stage for the week. Stocks rose last week on a shock, a drop in July jobs, because weak hiring gives the Fed less reason to rush into a rate hike. But the Fed has not fully relaxed, so attention now turns to prices.

This week brings consumer prices, followed by producer prices and retail sales. With the Fed all but dropping advance hints about its next move, even one inflation print can swing long-term yields sharply. AI-linked earnings from CoreWeave, Cisco and Applied Materials are also due. A cluster of tests is arriving just as the market sits near records.

Middle East news stayed messy over the weekend. Iran put forward tough conditions for reopening the Strait of Hormuz, including a U.S. troop pullout, and a fire broke out early Sunday at Saudi Aramco's Jizan refinery. It was put out, but Yemen's Houthis claimed a drone attack. Coming right after oil shed its war premium on talk of a deal, it is a reminder that energy facilities remain at risk.

There are also warnings against getting carried away. Bank of America said its sentiment gauge is near the most euphoric level since 2021 and urged cutting risk, and some valuation measures sit at historic highs. U.S. futures were flat on Sunday as traders waited for CPI.