SharespectiveWall Street, before morning tea

Daily newsletterSat 12 Sep 2026

Rally First, Hike Later Plus: Oracle booked a US$664 billion order backlog and gave the whole rally back by lunchtime.

Good morning, and welcome to Saturday. American consumer prices rose 0.4% in August and 3.4% over the year, which is what economists had pencilled in, and by the afternoon futures traders put the odds of a Federal Reserve rate rise on Wednesday at 88%, up from 67% before the number landed. Stocks went up anyway. The S&P 500 added 0.86% and ended four straight days of falls.

The reason had almost nothing to do with the Fed. Oil fell hard after Iranian state media said Tehran would meet Gulf states in Oman to talk about the Strait of Hormuz, and that was enough. A market that spent all week terrified of the oil price decided it could live with dearer money as long as fuel got cheaper.

Market snapshot

US levels are Friday 11 September's official 4​pm New York close. The NZX 50 and ASX 200 are Friday's local closes, which happened before New York opened; currencies were taken late in Friday's New York session, and the change column is the move over that session.

Wall Street rallied on the day a rate rise became a near certainty

The August consumer price index landed in line: up 0.4% for the month and 3.4% over the year. The core measure, which strips out food and energy, rose 0.3% against the 0.2% economists expected, though its annual rate actually eased to 2.4% from 2.5%. The US 10-year Treasury yield spiked to 4.99%, the highest in about three years, then settled back near 4.94%. Every one of the 11 S&P 500 sectors finished higher, and the Dow added about 0.97%.

Why a rate rise stopped frightening anyone. Look at the gap between those two inflation numbers — 3.4% headline against 2.4% core — and you can see what this is. Almost all of the problem is energy, and energy is not something a central bank can do much about in a hurry. So the market has quietly started treating the oil price, rather than the Fed, as the thing that decides the next few inflation prints. On Friday oil obliged: Brent fell 3.58% to US$103.78 a barrel and WTI dropped 2.17% to US$99.23, both snapping long winning streaks after the Oman headlines.

Keep the bounce in proportion, though. Even after Friday, Brent finished the week up 8.4% and WTI up 9.2%, having touched US$108 on Thursday. One day of diplomacy does not undo a week in which the market repriced the cost of moving everything around the world.

Oracle signed US$30 billion of new AI contracts and the stock still finished lower

Oracle reported after Thursday's close with the biggest number anyone in the AI trade has produced this year: remaining performance obligations, its contracted order book, reached US$664 billion, against the US$639.89 billion analysts expected. Revenue was US$19.3 billion, cloud infrastructure revenue grew 121% to US$7.4 billion, and the company added more than US$30 billion of new AI cloud contracts in a single quarter. The shares opened at US$164.45, up 7.5%. They closed at US$151.34, down 1.1% on the day.

What an order backlog is, and isn't. Remaining performance obligations are revenue a company has signed contracts for but not yet delivered. It is a genuine commitment, not a sales pipeline — but it is a promise to supply something Oracle has not built yet, and turning it into cash means datacentres, chips, electricity and an enormous amount of capital. A year ago this same measure sent the stock up 36% in a day. The shares are down roughly 48% over twelve months and sit more than 50% below the peak they hit last September.

Management's answer on the balance sheet was that much of the new business comes with customer prepayments or customers bringing their own hardware, so growth from here needs less capital. The sticking point was delivery: what limits conversion is supply — power and equipment — rather than a shortage of customers wanting to sign.

American diesel went past US$6 a gallon and households have stopped pretending it's fine

The national average price of diesel in the United States hit US$6.06 a gallon on Friday, the first time on record it has cleared US$6. It was US$5.85 a week earlier and US$3.71 this time last year, and it has climbed about 60% since the war with Iran began in late February. In California it is US$7.98. Petrol, at a national average of US$4.29, has risen 15 cents in a week.

Why diesel is the one that hurts. Petrol is what households buy; diesel is what the economy runs on. Trucks, trains, ships and tractors almost all burn it, which makes it a cost sitting underneath nearly everything on a shelf rather than a line in a family budget. That is why a diesel spike shows up in consumer prices weeks later, and why it hit August's wholesale numbers before it reached these ones.

Americans have worked this out for themselves. The University of Michigan's preliminary sentiment index for September came in at 47.8, against expectations of 51.0 and August's 51.7 — the second-lowest reading in a series that starts in 1952, beaten only by May this year. Consumers now think prices will rise 4.6% over the coming year, up from 4.0% a month ago.

Newsworthy numbers

Worth a read

Wrapping up

The Federal Reserve decides on Wednesday 16 September, announcing at 2​pm Washington time — 6​am Thursday in Auckland, 4​am in Sydney — with markets pricing an 88% chance of a quarter-point rise taking the target range to 3.75–4.00%, and fresh projections alongside it. The Bank of England follows on Thursday with only about a 25% chance of a move priced, and the Bank of Japan on Friday, where roughly 90% odds of a rise to 1.25% are in the price. American August retail sales land at 8.30​am New York time on Wednesday, a few hours before the Fed.

Lennar reports after the close on Wednesday, and the number to watch is what it is giving away in sales incentives to shift houses with the 10-year yield near 4.94%. New Zealand's current account is out on Wednesday and June-quarter GDP on Thursday 17 September, where Westpac has pencilled in a 0.1% contraction, BNZ 0.2% and ASB 0.3%. In Australia, the Westpac-Melbourne Institute leading index arrives on Tuesday, August labour force figures on 24 September, and the RBA meets on 28–29 September.

The kiwi steadied at about US$0.5814 on Friday, pulling USD/NZD back to 1.7200 after a week that took it to a six-week low, while the Australian dollar firmed to US$0.7174 and left USD/AUD at 1.3939. Both were helped by the US dollar coming off its post-inflation high as long-dated Treasury yields eased, and both are now caught between a Fed that looks likely to tighten and two central banks of their own that markets think will do the same.

Have a good weekend — back Monday with the week in full.