Saudi pipeline hit as a rate-hike week begins

Good morning. Over the weekend Saudi Arabia shut its East-West pipeline, the route that carries crude to the Red Sea and lets exporters skirt the Strait of Hormuz. A drone attack launched from Iraq was blamed, and oil was climbing again by Sunday.

That is a problem because prices were already high. Brent finished last week above $104 a barrel, and diesel hit a record $6.20 a gallon. Fuel costs for truckers and farmers get passed down the line, which helps explain why August consumer prices rose 3.4%, once again outrunning wage growth of 3.1%.

All of this puts the spotlight on Wednesday's Fed meeting. Markets see close to a 90% chance of a quarter-point hike, the first in three years, and the 10-year Treasury yield is nudging 5%. Stocks bounced on Friday once the Fed picture cleared up, but the week as a whole was weak. US trading reopens today after futures started up Sunday evening.

In AI, the heads of Anthropic, OpenAI and xAI have all admitted the field is moving too fast, while bubble warnings and bullish earnings forecasts keep arguing it out.