Key Takeaways
- Fed-funds futures have shifted to a 70% probability of a September interest rate hike following firm inflation components and core CPI estimates.
- The US two-year Treasury yield jumped 10 basis points to 4.53%, reflecting market expectations for tighter monetary policy.
- OpenAI has entered discussions with major energy firms and power companies to secure the electrical grid for AI infrastructure.
- US existing home sales fell to 3.98 million in August, while housing supply reached a nine-year high of 4.9 months.
- Houthis in Yemen claim operations in the Red Sea are "defensive" and will only cease once the blockade on Yemen is lifted.
Inflation Data and Fed Expectations
Market expectations for a Federal Reserve interest rate hike in September have surged to 70% this morning. This shift follows analyst estimates for August core CPI, with a median projection of 0.22%. While the headline figures round to 0.2%, firm components in the Producer Price Index (PPI) suggest a potentially higher core PCE reading, the Fed's preferred inflation gauge.
In response to the hawkish outlook, the US two-year Treasury yield increased by 10 basis points, reaching 4.53%. Traders are aggressively pricing in a higher-for-longer interest rate environment as the central bank continues its effort to anchor inflation.
OpenAI and Energy Infrastructure
OpenAI, the creator of ChatGPT, has reportedly held high-level meetings with leading energy firms and power companies. According to reports from Politico, the discussions are focused on securing the electrical grid to support the massive power requirements of next-generation AI data centers.
The move highlights the growing intersection between artificial intelligence and national infrastructure. As AI scaling requires unprecedented levels of energy, OpenAI is seeking to ensure that the grid can sustain the high-density computing loads necessary for its operations.
Housing Market Slowdown
The US housing market showed signs of further cooling in August as existing home sales dropped to an annual rate of 3.98 million, meeting analyst estimates but falling from the previous 4.06 million. The median home price for existing homes stood at $429,100, representing a modest 1.6% increase from August 2025.
Notably, the supply of existing homes has reached 4.9 months, the highest level since 2015. This increase in inventory, combined with a 2.0% month-over-month decline in sales, suggests that high mortgage rates continue to dampen buyer demand despite more options entering the market.
Geopolitical and Legislative Developments
In the Middle East, a spokesperson for the Iran-backed Houthis stated that their operations in the Red Sea and Bab el-Mandeb Strait are "limited to specified targets" and are "defensive" in nature. The group maintained that freedom of navigation for international trade remains safe, though they insisted operations will only stop when the "aggression" against Yemen ends and the blockade is lifted.
On the domestic front, the US Supreme Court has temporarily blocked pro-GOP gerrymandered maps in Missouri while an appeal moves through the courts. Additionally, the White House announced $500 rebate checks for approximately 1 million Americans who were reportedly overcharged through Obamacare, while Senate leaders like John Thune face questions regarding the viability of proposed $5,000 stimulus checks.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.