Overnight, while the US slept

One speech did all the damage: Fed Chair Kevin Warsh used his Jackson Hole debut on Friday to say the summer's better inflation prints "do not tell me that underlying trends have meaningfully improved," and pointedly refused to commit to any path for rates. Markets read it as a chair who is willing to hike. US equities faded into the close — S&P 500 −0.25% to 7,711.76, the Nasdaq −0.7%, the Dow essentially flat at 53,560 — though all three still finished the week higher.

Rates & DXY: The front end did the work. The 2-year Treasury yield jumped 12 basis points to 4.35% while the 10-year rose to 4.72%, leaving the 2s10s spread (the gap between two-year and ten-year yields, a standard read on where policy expectations sit versus growth expectations) at about 37bp and flatter — a textbook hawkish repricing rather than a growth scare. Odds of a hike at the 15–16 September FOMC moved to roughly a coin flip, somewhere between 48% and 60% depending on which venue you look at, from around 35% before the speech. The dollar index (DXY — the greenback measured against a basket of major currencies) rose 0.6% to 99.66.

Why gold broke, and why I was wrong on Friday: On Friday I was long gold on what I called the reverse-supply-shock trade. The logic was this: the Iran/Hormuz energy disruption is a supply-side shock (higher prices caused by constrained supply rather than strong demand), and normally that pushes central banks to tighten, which lifts real rates (interest rates after subtracting inflation) and hurts gold. But the July FOMC held 9–3 with three dissents for a hike, and I read that as a Fed unwilling to react — a blocked policy channel, inflation without the offsetting rise in real rates, which is gold-bullish. Warsh reopened that channel in a single speech. Same shock, opposite conclusion, because the reaction function changed. That is the honest post-mortem: my read of the shock was right and my read of the central bank was wrong, and the central bank is the part that matters. It is worth adding that the supply side is now working against gold too — Brent has eased into the high $80s as Hormuz flows recover, so the inflation gold was supposedly hedging is fading at the same moment the Fed has decided to fight it.

Gold: trading 4458.93/4458.99. Friday's collapse is easier to read hour by hour than in summary: gold printed 4631.61 and then lost a hundred dollars inside a single hour to 4530.06, broke the 4524–4530 shelf next, and bottomed at 4445.54. It then gapped lower again at the weekend reopen, opening 4437.40, flushing to 4434.98, and has since clawed back to 4459. The new session's range is 4434.98–4466.06. RSI on the 15-minute (a momentum gauge from 0–100, below 30 is conventionally oversold) sits at 31.9 — genuinely stretched. My read: the trend has changed but the immediate move is exhausted, which argues for selling strength rather than selling here.

Crypto: Bitcoin 78,399 (15-min RSI 38.4, ATR — average true range, a measure of how far price typically travels in a bar — $218.89); session range 78,250–78,798, yesterday's high/low 79,380/77,902. Bitcoin had touched roughly $81,455 on Friday, a three-month high, before shedding 3.3% into the weekend and stabilising just under $78.5k. Ether 2,466 (RSI 35.2, ATR $11.31); session range 2,458–2,487, yesterday's high/low 2,533.57/2,446.47. Ether spiked to 2,533 late yesterday and could not hold a single hour above 2,500 — that failure is the more interesting piece of information.

Key FX:

• EURUSD 1.15821 — RSI 38.7 (soft, not oversold), ATR 2.9 pips. Session 1.15768–1.15821, Friday 1.15778–1.16598. The euro gave up 82 pips on Friday and has spent the entire Asian session pinned within five pips of the low.
• GBPUSD 1.35340 — RSI 42.2, ATR 4.7 pips. Session 1.35286–1.35378, Friday 1.35269–1.35990. Same shape as the euro, slightly less committed.
• USDJPY 160.121 — RSI 58.0, ATR 4.9 pips. Session 160.049–160.169, Friday 159.298–160.204. Back on the 160 handle, which is exactly where Japan's Ministry of Finance has historically started making noise about intervention (direct government buying of yen to slow the move). I'm not short here and I'm not long here.
• AUDUSD 0.71606 — RSI 44.0, ATR 3.0 pips. Session 0.71551–0.71618, Friday 0.71556–0.72080. Off 52 pips, holding just above Friday's low.
• NZDUSD 0.59133 — RSI 44.4, ATR 4.9 pips. Session 0.59089–0.59239, Friday 0.59050–0.59659. The kiwi has its own event risk on Wednesday.
• USDCHF 0.80929 — RSI 56.6, ATR 4.6 pips. Session 0.80751–0.80987, Friday 0.80257–0.80988. The franc lost 73 pips on Friday — notable, because it means this was a dollar-strength story, not a safe-haven-demand story.

Cross-asset snapshot:

Asset	Now	vs Prior Close	Vector
S&P 500	7,711.76	−0.25%	Mild risk-off
US 10Y	4.72%	Rising (2Y +12bp to 4.35%)	Hawkish, curve flatter
DXY	99.66	+0.6%	USD bid
Gold	$4,458.96	−$172.65 from Friday's high	Bearish — policy channel reopened
Bitcoin	$78,399	−$981 from yesterday's high	Weak, stabilising
Brent	~$88–90	Easing	Hormuz flows recovering

Context: no US holiday this week — Labor Day falls next Monday — so liquidity should be normal and building into Friday's payrolls.

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