[Tokyo's Core Inflation Approaches Central Bank Target, Probability of September Rate Hike Rises Further] 1. Data released on Friday showed that Tokyo's core consumer price index (CPI) rose 1.8% year-on-year in August, accelerating for the third consecutive month, slightly higher than the market expectation of 1.7%, and further approaching the Bank of Japan's (BOJ) 2% target level. Excluding fresh food and fuel prices, the index, considered a better reflection of underlying price trends, rose 2.0% year-on-year, higher than July's 1.8%, indicating that price pressures are spreading to a wider range of sectors. 2. As a leading indicator of national inflation trends, Tokyo's CPI data will be one of the key factors the BOJ will review at its policy meeting on September 17-18. A senior economist at Sompo Institute Plus pointed out that a renewed escalation of the Middle East conflict could push up energy costs, and its second-round effects are expected to lead to broader price increases; the BOJ has no reason to wait until October to act. 3. The BOJ kept its benchmark interest rate unchanged at 1% in July, but issued its strongest warning to date regarding the risks to inflation. The recent surge in wholesale inflation to 7.2% year-on-year in July highlights that price pressures from the Middle East conflict are gradually being transmitted to consumers. Analysts expect the central bank to raise interest rates as early as September, and may proceed with policy normalization at a faster pace than the current twice-a-year schedule. 4. While Bank of Japan Deputy Governor Ryozo Himino did not pre-commit to a September rate hike on Thursday, he emphasized the need for timely action and focused on the risk of excessive inflation. The market is closely watching any signals that Bank of Japan Governor Kazuo Ueda may release at next week's G20 finance ministers' meeting.

U.S. Central Command: We only allow ships to enter and leave Iranian ports for humanitarian reasons.

[Goldman Sachs estimates total Gulf oil exports at 15-16 million barrels per day, actual passage through the Strait of Hormuz may be close to US official data] (1) Goldman Sachs estimates that total Gulf oil exports recently have been around 15-16 million barrels per day, still 7-8 million barrels per day lower than pre-war levels, but up 5-6 million barrels per day from the March low. (2) Although the above data focuses on total Gulf traffic, the upward revision suggests that the amount of oil transported through the Strait of Hormuz may be approaching the 8-10 million barrel per day range estimated by US officials. (3) Goldman Sachs points out that "the increase in 'covert' transit by professional carriers and ship-to-ship transshipment indicates that producers and carriers are adapting to the Middle East conflict." The bank maintains its previous assessment that, in the event of continued supply disruptions, the upside potential for European natural gas prices and long-term oil product contracts will be greater than that for crude oil.