Friday, September 4

Federal Reserve Governor Christopher Waller’s preference to hold rates at the September 15–16 meeting became the session’s decisive catalyst, though he kept the decision conditional on incoming inflation data. Markets cut the implied probability of a 25-basis-point hike from roughly two-thirds earlier in the week to near even odds, putting Friday’s August employment report and next week’s CPI at the center of the near-term rates outlook.

The repricing ran through every major asset class. The S&P 500 rose about 1.1%, the Nasdaq gained roughly 1.4%, and European and Asian equities followed. The U.S. 10-year yield fell from about 4.82% to 4.77–4.79%, with the short end outperforming in a bull-steepening move, while the Dollar Index slipped below 99. Gold jumped roughly 2–3% to briefly top $4,500 an ounce, and silver moved above $66. The yen was the standout currency, surging about 2% to around ¥155.5 per dollar amid renewed speculation of a Bank of Japan hike and intervention risk. The rally therefore reflects a specific rates repricing, not merely improved sentiment; a weak payrolls report would reinforce it, while firm data could quickly reverse the move.

Oil prices pulled back modestly as the broader dollar and rates rally reduced some pressure across markets, but the underlying supply picture remained unusually tight. Brent settled around $95.6–$95.7 a barrel after approaching $97, while WTI traded near $89.5–$90.5 after testing just below $91.

The restraint in prices should not be mistaken for a resolution of the geopolitical shock. Shipments through the Strait of Hormuz were described as running at roughly half of pre-war export volumes, with U.S. military tanker escorts continuing and renewed U.S.–Iran strikes sustaining the risk premium. That leaves crude caught between two forces: softer near-term rate expectations are supportive for commodities, while the session’s retreat from the highs suggests traders are not yet pricing an additional escalation beyond the disruption already embedded in benchmarks. Energy also lagged the equity rebound, underscoring that the day’s dominant cross-asset impulse came from lower yields rather than a fresh acceleration in oil demand.