Taiwan Semiconductor Manufacturing Company (TSM) reported a remarkable 53.3% increase in August sales compared to the same month last year, according to reports from Investing.com India. As a major supplier to Apple Inc, Microsoft, and Nvidia, TSM's record August sales serve as a positive indicator for the broader technology sector. The strong performance is particularly significant for AI and data center-related stocks, suggesting continued robust demand in these technology segments. The world's largest contract chipmaker posted revenue of $514.8 billion New Taiwan dollars ($16.35 billion) for last month, representing a 10.1% increase from July and marking the second fastest year-on-year monthly sales print for 2026. TSM is struggling to meet overwhelming demand as the AI buildout continues to suck up supply, with Microsoft's CFO confirming that Azure remains supply constrained.
The Producer Price Index (PPI) rose 0.4% in August, meeting economists' consensus estimates, as reported by Investing.com India. However, the core PPI, excluding food and energy, increased only 0.2%, which came in below the expected 0.3% rise. The positive aspect of this data is that core inflation remains relatively contained, providing some relief to policymakers. Unfortunately, wholesale goods prices surged 1.1% in August, while wholesale service costs rose only 0.1%. Energy prices experienced a significant shock, rising 4.2%, though this figure did not include the recent surge in diesel prices due to data collection through August 11th. Brent crude futures rose over 2% and topped $103 for the first time since July amid signs of a protracted US war on Iran, with Iran ready for a more intense war.
The PPI data has created additional pressure on the Federal Reserve to raise interest rates, according to Investing.com India. Treasury yields rose following the PPI report, which typically signals expectations for higher borrowing costs. US 10-year yields increased 3 basis points to 4.87%, reaching the highest level since October 2023. The European Central Bank raised its key interest rate by 0.25% on Thursday, adding to the pressure on the Fed to follow suit unless upcoming inflation data comes in significantly below expectations. Futures raised the probability of a September hike from 61% on Tuesday to 63% this morning, with the Bank of Japan's board member Kazuyuki Masu warning of broadening price pressures that have pushed underlying inflation "very close" to its 2% target. The Consumer Price Index (CPI) will be announced on September 11th, with economists expecting a 0.4% rise in August and a 0.2% increase in the core CPI.
S&P 500 equity risk premium relative to Treasury yields is at its lowest since 2002, indicating stocks have greater sensitivity to rising bond yields. LME copper futures hit new records as commodity moves put upward pressure on bond yields, with the rise then accelerating after the US Treasury Department announced they'd be purchasing up to $6 billion of longer-dated Treasuries in their initial buyback operation. WTI crude oil futures remain higher by about 1.7% after rising as much as 1.9%, with Brent crude topping $102 a barrel amid Iran's readiness for a more intense war. The packed market calendar includes Oracle's earnings report after the US close, which will offer a fresh read on AI spending tolerance given the company's massive debt load. Oracle shares are down 17% this year, sharply underperforming tech peers as traders punish the firm over concerns about heavy capital spending and leverage, despite strong cloud unit sales projections.
