Overnight, while the US slept

A holiday session that wasn't quiet at all. US stock and bond markets were shut for Labor Day, so the last cash prints we have are Friday's: the S&P 500 −0.38% to 7,718.60, the Nasdaq Composite −0.29% to 26,506.99 and the Dow −0.51% to 53,414.25. All three fell for the same reason — August payrolls came in at +162,000 against roughly 53–56k expected, and a jobs number that hot in this environment reads as a reason to tighten, not to celebrate.

Rates & DXY: The US 10-year finished Friday at 4.79%, up about 3bp on the payrolls print, while the 2-year — the maturity most sensitive to what the Fed does next — pushed to roughly 4.37%, its highest since January 2025. That leaves the 2s10s curve (the gap between the two, a rough gauge of where the market thinks policy is heading) around 42bp and flattening, because the front end is doing the moving. That shape is the real message: this isn't a growth story, it's a policy story. Fed funds futures now put the odds of a 25bp hike at the 16 September meeting somewhere in the 58–66% range depending on when you look. The dollar index closed Friday at 99.18 and spent Monday leaking back toward the 99 handle — not because the dollar is weak, but because one currency in the basket went vertical.

The yen ripped, and it wasn't subtle. USD/JPY came apart from around 156.00 to a low of 154.05 during the European morning, breaking below 155.00 for the first time since February. Roughly a yen and a half of that came in a forty-minute window. Three things are stacked on top of each other here: markets have now fully priced a 25bp Bank of Japan hike at the 17–18 September meeting; Japan's Ministry of Finance has been buying yen aggressively — a record ¥15.4 trillion between 30 July and 26 August, followed by a reported $98.7 billion operation on Friday; and unusually, the US has been participating in that operation rather than objecting to it. Monday's thin, US-holiday liquidity is historically Tokyo's favourite canvas. I'd stop thinking of this as a bounce and start thinking of it as a trend.

Oil and the Gulf: WTI crude climbed 0.9% to about $92.30 and Brent over 1% to roughly $97.50, after fresh US–Iran missile exchanges near the Strait of Hormuz over the weekend and another attack on a Saudi Aramco facility with damage still being assessed. WTI is up around 10% on the week. Triple-digit oil is starting to look like a question of when, not if.

Gold: trading 4406.24/4406.33. Range over the last session 4381.16–4435.26; the prior session's high and low were 4490.76 and 4365.72 — so we sit about $84 below that recent high. This is the framework case, and it's worth being precise about it. What we have is a supply-side shock (a war premium pushing energy costs up, rather than investors fleeing to safety), and the textbook chain runs: oil up → inflation sticky → central bank turns hawkish → real rates (interest rates after subtracting inflation) rise → the dollar catches a yield bid → gold falls. Critically, that chain only works if the central bank actually reacts — and this one is. Chair Warsh was hawkish at Jackson Hole, payrolls came in hot, and hike odds are climbing. The policy channel is wide open, and gold duly erased its Waller-driven bounce. The offset, and it's a real one: China's central bank added to its gold reserves again in August, extending a buying spree that has been an ever-present bid under this market all year. That's why I want to sell a rally rather than sell here.

Crypto: Bitcoin 79,207 (RSI 51.2, ATR ~$94); last session's range 79,151–79,249, prior-session high/low 80,559 / 78,651. That's roughly $1,350 below the recent high and it has a specific cause — the Liquid Network, a Bitcoin sidechain used by several exchanges, was drained of about $320 million on Monday, roughly 4,000 of the 4,200 BTC in the relevant wallet, 95% of it gone inside 23 minutes. Blockstream blames a software bug rather than compromised keys, and the attacker has left a message claiming to be a white hat and inviting contact. That's a coin-flip: funds returned is a bounce, funds gone is another confidence hit. Ether 2,491.87 (RSI 53.4, ATR ~$4.7); range 2,489–2,495, prior-session high/low 2,534.57 / 2,462.67. Ether continues to hold up better than Bitcoin, which has been the cleanest relative-strength signal in crypto for a fortnight.

Key FX:

• EURUSD 1.16230 — RSI 45.9 (neutral), ATR ~1.0 pip. Prior-session H/L 1.16359 / 1.16071. Going nowhere ahead of Thursday's ECB.
• GBPUSD 1.35417 — RSI 54.3, ATR ~2.5 pips. Prior-session H/L 1.35477 / 1.35055. The firmest of the majors, but without a story.
• USDJPY 154.336 — RSI 43.2, ATR ~2.8 pips. Prior-session H/L 156.281 / 154.059. A 222-pip range says everything about where the action is.
• AUDUSD 0.72165 — RSI 41.7, ATR ~1.3 pips. Prior-session H/L 0.72249 / 0.71944. Heavy despite rising RBA hike odds; a busy local data morning ahead.
• NZDUSD 0.58745 — RSI 39.8, ATR ~1.8 pips. Prior-session H/L 0.58888 / 0.58662. Kiwi soft even after the RBNZ's hike to 2.75%.
• USDCHF 0.80922 — RSI 43.3, ATR ~1.9 pips. Prior-session H/L 0.81100 / 0.80847. The franc is quietly firm, as it usually is when the Gulf is noisy.

Cross-asset snapshot:

Asset	Now	vs Prior Close	Vector
S&P 500	7,718.60 (Fri close)	−0.38%; US shut Monday	Risk-off tilt
US 10Y	4.79%	+3bp Friday, no Monday cash trade	Hawkish
US 2Y	~4.37%	Highest since Jan 2025	Curve flattening
DXY	~99 (99.18 Fri close)	Softer, dragged by the yen	Firm ex-JPY
Gold	4,406.24	−$84.5 from the 4,490.76 high	Bearish (supply-side chain intact)
Bitcoin	79,207	−$1,352 from the 80,559 high	Weak
Brent	~$97.50	+1%	Hormuz risk premium

Context: US cash equities and Treasuries reopen tonight after the holiday, so today's Asian and European sessions are working off Friday's US closes. Expect the real repricing when New York walks in.

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