August CPI will miss this week's $110 oil, with a 70% chance of a hike already priced

The August consumer-price report due at 8:30 a.m. Eastern is the last inflation reading the Federal Reserve will have before next week's meeting, and it will not include this week's jump in crude. The 10-year Treasury yield closed Thursday at 4.95%, the 2-year at 4.56%, and the 30-year at 5.37%. The S&P 500 fund ASPY is 0.6% higher in extended trading after a fourth consecutive decline, a modest bid against oil that is still above $100.

The print the Fed will actually see

July's CPI rose 0.1% on the month and 3.4% over the year. Core prices, which exclude food and energy, rose 0.2% and 2.5%. The consensus forecast for August is a 0.4% rise in the headline index and 0.2% in the core. Reuters has tied the expected pickup to a rebound in gasoline after two monthly declines, including a 2.9% drop in July.

The Strait of Hormuz is the chokepoint at the mouth of the Persian Gulf, and it typically carries 20 million barrels of oil a day, a fifth of global supply. After U.S. and Iranian strikes resumed, commodity-ship transits averaged 10 a day, the lowest since May. Brent traded as high as $110.19 a barrel overnight before slipping to $103.62 as of 7 a.m. Eastern, down 3.7% on the day, still 7.6% above last Friday's $96.28 settle. The gasoline rebound in the consensus is last month's pump price, not this week's Strait of Hormuz premium.

As of Thursday, the market had already priced about a 70% chance of a quarter-point increase at next week's meeting, odds that will be marked against a CPI reading that stops before this week's oil. A core print that stays at 0.2% would leave the Fed looking at cooling underlying inflation against crude that is still above $100. A 0.3% core would reinforce a hike that is already the majority case. The long-Treasury fund BTLT fell 1.2% on its heaviest volume in 20 sessions, a third straight decline. High-yield credit fund BHYG dropped 0.5%, also a fourth down day, on its heaviest volume in 20 sessions.

A soft core would make this morning's caution look overdone. It would not put oil back where it was two weeks ago.

Crude pulls back; energy stocks never confirmed the spike

West Texas Intermediate is at $98.91, down 3.5%, after an overnight high of $104.46. The oil fund BUSO jumped 5.6% Thursday on its heaviest volume in 20 sessions. In extended trading it is down 3.6%. Energy stocks never joined that move. The energy-stock fund AXLE closed Thursday 0.6% lower on its heaviest volume in 20 sessions and is down another 0.6% before the open.

Oil futures funds rose a median 3.9% Thursday, all eight higher.

Equity funds are slightly higher; the oil fund is reversing Thursday's surge; energy stocks are still lower. The Nasdaq-100 fund AQQQ closed Thursday down 1.1%, a third consecutive decline. Its premarket quote is too wide to treat as a clean signal. Asia finished lower overnight; Europe is higher in morning trade. The CBOE Volatility Index is at 17.21 despite Brent still above $100.

The University of Michigan consumer survey is due at 10 a.m. There is no Treasury auction today. August CPI can speak to last month's prices. It cannot unwind this week's oil, and it cannot, on its own, close the gap between a cooling core and a supply shock the FOMC will be able to see out the window.