By Ahmad Assiri, Research Strategist at Pepperstone
A session unfolded marked by long-end yields anxiety climbing to historic highs before easing back and gold powering to another record peak.
SPX managed a 0.5% gain, with the Nasdaq outperforming on the back of an 11% surge in Alphabet shares after a favorable antitrust ruling relieved it from being forced to spin-off Google Search engine. Yet the broader backdrop remains challenging, July’s JOLTS report showed openings falling to 7.18mn from 7.36mn in June missing expectations of 7.38mn. More concerning was the drop in non-cyclical sectors like healthcare, retail and hospitality that had underpinned hiring post-pandemic. This suggests a structural softness rather than a cyclical. Wall Street took this as added fuel for September rate cut bets, giving equities some support.
Fixed income remained the center of tension. In the UK, 30-year gilt yields surged to 5.7%, their highest since 1998, before last session buying trimmed the move. US 30-year yields briefly breached 5%, a level tested around two months ago, before settling at 4.9%. With markets simultaneously pricing near-term Fed cuts and longer term treasuries and fiscal risks, the yield curve seems to . The shift in narrative is telling that investor psychology is no longer dominated by inflation alone but by a more complex blend of debt sustainability and political interference and central banks projections.
In commodity markets, oil sold off, WTI down 2.6% and Brent -2.4%, on headlines that OPEC+ intends to continue raising output at the upcoming meeting. While insiders emphasized no final decision yet to be made, the signal was enough to deflate prices in a market prone to overreaction.
By contrast, gold was the undisputed star. The yellow metal surged to a fresh record near $3,580/oz before easing on light profit-taking. Its rally is underpinned by multiple forces, conviction in a September Fed cut, tariffs raising costs and a sense that the pain point for growth is drawing nearer. Gold has become more than a tactical tool; it is a barometer of decreasing confidence in the economic and financial outlook. Notably, flows have broadened beyond ETFs into macro funds and perhaps central banks adding depth to the move.
On the political scene, Harvard won a case against the Trump administration after a federal court ruled the freezing of $2bn in research funding unlawful. This followed another ruling striking down tariffs as illegal, developments that collectively underscore Trump’s string of judicial setbacks. Markets are increasingly alert to the political risks surrounding US policy continuity and the independence of institutions but this is unlikely to change any of the tariff and trade deals in place and it seems more like noise.
Looking Ahead
Today brings weekly jobless claims and ISM services PMI, expected at 50.9, still in expansionary territory. Yet the real test lies ahead, tomorrow’s nonfarm payrolls release, which will set the tone for September’s FOMC. With risk concentrated, positioning into the print is more necessity than choice.