SG Morning Brief | CPI Plunges to 3.5%, SK Hynix Soars 27%, IBM Crashes 25%; Rate Hike Odds Collapse

US Overnight

The S&P 500 rose 0.38% to 7,543.59, the Nasdaq gained 0.90% to 26,107.01, and the Dow eked out a 9.63-point gain (+0.02%) at 52,508.27 after IBM's historic 25% plunge offset Goldman Sachs' 9% rally. June CPI was the headline: headline inflation fell to 3.5% from 4.2%, well below the 3.8% consensus, while core CPI eased to 2.6% versus 2.8% expected. Monthly CPI declined 0.4%, the biggest drop since May 2020, driven by falling energy prices. The 10-year yield fell 6 basis points to 4.553% and the 2-year dropped 8 bps to 4.181%. July rate hike probability collapsed below 20%. LPL Financial's Jeffrey Roach said core inflation should ease further through Q3-Q4 "if supply chains normalize by Labor Day." Trump also reversed course on his Monday Hormuz toll announcement. Regan Capital's Skyler Weinand cautioned: "The weaker inflation data keeps the Fed on hold, but almost every communication from Chair Warsh has been hawkish."

Key Movers

SK Hynix (SKHY) +27% — SK Hynix ADR surged 27.29% to $193.92, a record high, erasing all losses since its IPO debut. The catalyst: SK Hynix officially began mass production and shipments of 12-layer HBM4 memory chips for Nvidia's next-generation "Vera Rubin" AI platform. Unlike previous sample shipments, this is the final-specification product that has passed all quality certifications. Full-scale HBM4 shipments to Nvidia will expand from September. Piper Sandler noted aggressive call-buying in $185 and $200 strikes.

IBM (IBM) -25% — IBM plunged 25.21%, its worst day on record — exceeding the 23% Black Monday crash in 1987. Preliminary Q2 EPS of $2.93 missed the $3.01 consensus as enterprise clients shifted spending from software and mainframes toward AI infrastructure. The selloff subtracted approximately 445 points from the Dow, nearly cancelling Goldman Sachs' positive contribution. Salesforce fell 3.4% and Microsoft dropped 2% in sympathy.

Goldman Sachs (GS) +9% — Goldman surged 9% after posting record Q2 earnings: EPS of $20.98 nearly doubled the $14.48 consensus, and revenue of $20.34 billion beat the $16.13 billion estimate by 26%. Equity trading revenue surged 72% and investment banking rose 55%. JPMorgan gained 2.5% (EPS $6.14 vs $5.59) and BofA rose nearly 2%. On the other side, Citigroup fell over 5% and Wells Fargo dropped nearly 3% despite solid results.

SGX Preview

The STI was near 5,070. DBS near S$62.18, UOB near S$37.91. CPI at 3.5% is the most bullish macro signal for Singapore since the war began — it confirms that falling oil translates directly into disinflation. Singapore banks face a nuanced setup: lower rate hike odds may compress NIM expectations, but Goldman's record quarter shows that trading revenue can more than compensate. SK Hynix's HBM4 milestone is positive for the entire semiconductor supply chain including Venture Corp.

Asia Pre-Market

The 10-year yield at 4.55% and 2-year at 4.18% reflect the market pricing out hikes. Gold and bonds should benefit. Oil remains elevated near $78-83 after Monday's spike, but Trump's reversal on the Hormuz toll removes a structural headwind. The CPI print gives Warsh cover to hold through September. Chip stocks are the momentum trade again.

Today's US Earnings and Economic Calendar

Data Spotlight: June PPI (Tonight) — After CPI's 3.5% surprise, tonight's PPI completes the inflation picture. April PPI was a shocking 6% YoY. If June PPI follows CPI lower, the disinflation narrative is confirmed and rate hike odds evaporate entirely. TSMC reports Thursday — after SK Hynix's HBM4 milestone, TSMC's AI revenue guidance will determine whether the memory-to-foundry pipeline is as strong as the market now believes.

One More Thing

CPI at 3.5%. Core at 2.6%. Monthly decline of 0.4%. Those three numbers change everything. Six weeks ago, CPI was 4.2% and 9 of 18 Fed members wanted to hike. Today, rate hike odds are below 20%. The Iran war's inflation shock — which drove oil to $106, CPI to 4.2%, and the 30-year yield above 5% — is unwinding faster than anyone expected. But Weinand's warning lingers: Warsh has been hawkish in every communication since taking the chair. One data point does not make a trend. If July CPI re-accelerates on Trump's Hormuz escalation and $83 Brent, the hike debate returns instantly. For now, the market is trading the number it got, not the number it fears.

This briefing is for informational purposes only and does not constitute investment advice.