Overnight, while the US slept

Strong data, higher rates, softer risk: Wall Street fell as bond yields climbed. The S&P 500 lost about 0.75% to roughly 7,706, the Nasdaq fell about 1.1% to roughly 26,936, and the Dow dropped about 0.7% (−352 points) to roughly 51,512. Around 72% of US stocks closed lower. Small caps did worst (Russell 2000 about −1.6%), and energy was the only S&P sector that rose.

Rates & DXY: The trigger was S&P Global's flash September PMIs (early monthly surveys of purchasing managers). The composite came in at 58.4, up from 56.0, the highest reading since July 2021, with services at 58.7 against roughly 56 expected. Markets moved the odds of a Fed hike in October up to about 70–75%. By mid-afternoon New York time the 2-year yield was up roughly 12bp to about 4.90%, the 10-year up about 14bp to roughly 5.11% (the highest since 2007), and the 5-year had crossed 5% for the first time since 2007. The shape of the curve matters more than the levels here. The 10-year rose slightly more than the 2-year, so 2s10s (the gap between 2-year and 10-year yields) steepened a couple of basis points even as hike odds rose. That's a bear steepener, meaning long-dated bonds sold off hardest. My read is that markets are demanding more compensation for inflation and fiscal risk, not just pricing one more hike. The DXY (the US dollar index against six major currencies) reached about 101.1, its highest since late July.

Oil jumped again, and it matters for gold: Brent settled at about $103.08 (+3.9%), ending a losing streak. An armed group shut a valve on the pipeline from Libya's Sharara field, and output reportedly fell from about 340k to about 120k barrels a day. Iran's security chief also said Hormuz stays shut until Tehran's conditions are met, which undercut Tuesday's optimism about US–Iran talks at the UN. This is textbook supply-side shock territory (inflation coming from a cut in supply rather than strong demand). In this case the policy channel is wide open, because the Fed hiked last week and the market is pricing another. So the chain works as expected: higher oil keeps inflation sticky, the Fed stays hawkish, real rates (yields after inflation) rise, and gold loses. Nothing about this conflict is a reason to own gold right now.

Gold: trading 4,287.32 / 4,287.52. Wednesday's range was 4,274.65–4,369.37 and Tuesday's was 4,291.55–4,376.07. Gold fell about $68 on Wednesday, and most of that came at the New York open straight after the PMIs. It has now closed back below Tuesday's low. The 4,292–4,300 zone was support and I now treat it as resistance. Yesterday I called gold lower and it went lower. But my sell zone at 4,378–4,388 was too ambitious and never filled, which I'll fix today.

Crypto: Bitcoin 84,427 (RSI 48.7; ATR $164). Today's range so far is 84,181–84,420, and Wednesday's was 83,446–87,275. The move from Wednesday's high to its low was about $3,800. It broke down with the yield spike, and reports put about $237M of leveraged longs liquidated in one hour. Ether 2,675 (RSI 49.0; ATR $7.1). Today's range so far is 2,666–2,674, and Wednesday's was 2,630.9–2,786.9. Both have bounced off their lows but haven't reclaimed the level they broke. I was long both coming into Wednesday and I was wrong. I underestimated how badly a 5%+ ten-year hurts anything priced on liquidity.

Key FX:

• EURUSD 1.1384. RSI 45.6 (neutral), ATR 4.4 pips (ATR is the average true range, a measure of typical movement per 15-minute bar). Wednesday's range was 1.13702–1.14499. The pair broke the 1.1400 round number and closed near the lows, and the euro is back at its weakest since July. Stronger euro-area PMIs are the only thing slowing the slide.
• GBPUSD 1.3244. RSI 44.1, ATR 4.5 pips. Wednesday's range was a wide 125 pips (1.32237–1.33489). Sterling is heavy but choppy.
• USDJPY 158.28. RSI 52.2 (neutral), ATR 5.9 pips. Wednesday's range was 157.339–158.402. The pair is pressing Wednesday's high. This is MOF-intervention territory (the risk that Japan's Ministry of Finance steps in to buy yen), so I wouldn't chase it.
• AUDUSD 0.7042. RSI 48.0, ATR 3.6 pips. Wednesday's range was 0.70258–0.71192. The expected RBA hike on 29 September is cushioning the Aussie, but it still lost nearly 100 pips peak to trough.
• NZDUSD 0.5679. RSI 53.9, ATR 3.3 pips. Wednesday's range was 0.56606–0.57318, and the kiwi is basing just above 0.5660.
• USDCHF 0.8248. RSI 51.6, ATR 3.7 pips. Wednesday's range was 0.81993–0.82605. The SNB meets today (see section 2).

Cross-asset snapshot:

Asset	Now	vs Prior Close	Vector
S&P 500	~7,706	~−0.75%	Risk-off on rates
US 10Y	~5.11%	Rising (~+14bp)	Hawkish, bear steepener
DXY	~101.1	~+0.5%	USD bid, 2-month high
Gold	4,287	−$4 below Tue low 4,291.55; −$68 on Wed	Bearish, supply shock with policy channel open
Bitcoin	84,427	+$981 above Wed low 83,446	Weak, broke the 85k shelf
Brent	~$103.5	~+3.9% (Wed settle ~$103.08)	Libya outage plus Hormuz standoff

Context: this is a normal session with a light US data slate. The big shock (the PMIs) is already priced, so today is about whether the market adds to it or pulls back.

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