Waller told Reuters that recent data “suggest we are finally seeing some signs of disinflation” and that if that continues in the figures due over the next two weeks, he would be “inclined to support holding the target for the federal funds rate at its current setting.” He argued tariff effects have been muted and higher energy prices have not spilled substantially into the rest of the economy, while conceding inflation is still meaningfully above the 2% target. Because that directly contradicts the hawkish tone Chair Kevin Warsh set at Jackson Hole, CME FedWatch odds for a hike at the 15-16 September meeting fell roughly 15 percentage points to 48.4%, dragging the 10-year Treasury yield down to about 4.75%.

Two forces are working against each other and the rates channel is winning. The August ISM Services PMI at 55.4 with new orders at a three-and-a-half-year high is unambiguously strong data, and prices paid at 72.6 argues for tighter policy. But the Waller comments reset the near-term policy path, and the single biggest driver today is the Yen: USD/JPY has fallen more than 2% toward 155 on hawkish Bank of Japan repricing and intervention speculation, which some desks are describing as the early stages of a carry-trade unwind. With the Yen carrying 13.6% of the Dollar index basket and the Franc, Loonie and Euro all firmer, the index has slipped to about 99.26.

The Bank of Canada held its policy rate at 2.25% for a seventh consecutive meeting on Wednesday but warned that upside risks to inflation have increased. Markets responded by pulling the first expected 25bp hike forward from January to December and firming up odds of 75-100bp of tightening over the next twelve months. Add broad Dollar weakness and crude back above $92, which supports the commodity-linked Loonie, and the pair is testing the 1.3800 level that Brown Brothers Harriman identifies as key support. Scotiabank has cut its short-term fair value estimate to 1.3811 from 1.3880 and sees room into the mid-to-upper 1.37s.

Wednesday’s dip reflected Trump’s comment that renewed strikes on Iran would likely be short-lived. That framing did not survive the night. Iran launched fresh attacks on US forces in Kuwait, the UAE and Jordan, Trump dismissed them as a “love tap” and said the US is prepared to strike again at any time, and crude resumed its advance. WTI is up roughly 2.1% near $92.90 with Brent near $97.45, taking the weekly gain to almost 10%. US crude stocks fell 4.45 million barrels last week and Strait of Hormuz tanker traffic remains below its ten-day average.

Gold slipped below $4,300 on Wednesday to a nearly four-week low as Treasury yields hit 4.818%, the highest since November 2023. Today the two headwinds that had been capping bullion — a firm Dollar and rising yields — have both reversed, and the metal is up around 2.3% near $4,490. It has now cleared the $4,450 horizontal resistance, leaving the 200-day moving average near $4,533 as the next hurdle before $4,700. Support sits at $4,400, then the 100-day SMA near $4,357.

It is broad but tech-led. The S&P 500 is up about 0.49% near 7,704 and the Nasdaq is outperforming at +0.88%, while the Russell 2000 jumped 1.13% at the open on the rate-relief trade, which is a healthy breadth signal. The standout single-stock moves are Snowflake, up more than 20% after a strong quarter that lifted the whole software complex, ChargePoint up over 45%, and Palantir higher on a US Army TITAN contract. Nvidia’s $12.93 billion agreement to buy Hugging Face adds to the AI bid. On the downside, Ultragenyx cratered on a failed Phase 3 trial and Victoria’s Secret, HPE and Ciena all fell.

The same rate-relief trade lifting equities. Softer labour data and Waller’s comments trimmed hike odds, easing the yield headwind that had pinned Bitcoin in a $77,000-$80,000 range through the week; BTC is near $77,900 after opening at $77,310. Dogecoin is up around 2% near $0.0833 on a 13.5% jump in trading volume, reclaiming the $0.0813 level analysts had flagged as the immediate hurdle. Bitcoin ETF flows remain the swing factor — August drew roughly $3.5 billion but sessions have since alternated between inflows and redemptions.

Three things. First, whether the equity and bond rally holds into the close now that ISM services has landed hot on both growth and prices — a fade would suggest the market is re-weighting the inflation side. Second, any further US-Iran headlines, which have moved crude by several percent a day all week and feed straight back into the rate-hike debate through energy inflation. Third, positioning into Friday’s Non-Farm Payrolls at 08:30 ET, which now carries unusual weight after ADP’s 38,000 print and Waller’s explicit data-dependence. Canada’s labour force survey lands the same morning, which matters for the USD/CAD setup.

Waller told Reuters that recent data “suggest we are finally seeing some signs of disinflation” and that if that continues in the figures due over the next two weeks, he would be “inclined to support holding the target for the federal funds rate at its current setting.” He argued tariff effects have been muted and higher energy prices have not spilled substantially into the rest of the economy, while conceding inflation is still meaningfully above the 2% target. Because that directly contradicts the hawkish tone Chair Kevin Warsh set at Jackson Hole, CME FedWatch odds for a hike at the 15-16 September meeting fell roughly 15 percentage points to 48.4%, dragging the 10-year Treasury yield down to about 4.75%.

Two forces are working against each other and the rates channel is winning. The August ISM Services PMI at 55.4 with new orders at a three-and-a-half-year high is unambiguously strong data, and prices paid at 72.6 argues for tighter policy. But the Waller comments reset the near-term policy path, and the single biggest driver today is the Yen: USD/JPY has fallen more than 2% toward 155 on hawkish Bank of Japan repricing and intervention speculation, which some desks are describing as the early stages of a carry-trade unwind. With the Yen carrying 13.6% of the Dollar index basket and the Franc, Loonie and Euro all firmer, the index has slipped to about 99.26.

The Bank of Canada held its policy rate at 2.25% for a seventh consecutive meeting on Wednesday but warned that upside risks to inflation have increased. Markets responded by pulling the first expected 25bp hike forward from January to December and firming up odds of 75-100bp of tightening over the next twelve months. Add broad Dollar weakness and crude back above $92, which supports the commodity-linked Loonie, and the pair is testing the 1.3800 level that Brown Brothers Harriman identifies as key support. Scotiabank has cut its short-term fair value estimate to 1.3811 from 1.3880 and sees room into the mid-to-upper 1.37s.

Wednesday’s dip reflected Trump’s comment that renewed strikes on Iran would likely be short-lived. That framing did not survive the night. Iran launched fresh attacks on US forces in Kuwait, the UAE and Jordan, Trump dismissed them as a “love tap” and said the US is prepared to strike again at any time, and crude resumed its advance. WTI is up roughly 2.1% near $92.90 with Brent near $97.45, taking the weekly gain to almost 10%. US crude stocks fell 4.45 million barrels last week and Strait of Hormuz tanker traffic remains below its ten-day average.

Gold slipped below $4,300 on Wednesday to a nearly four-week low as Treasury yields hit 4.818%, the highest since November 2023. Today the two headwinds that had been capping bullion — a firm Dollar and rising yields — have both reversed, and the metal is up around 2.3% near $4,490. It has now cleared the $4,450 horizontal resistance, leaving the 200-day moving average near $4,533 as the next hurdle before $4,700. Support sits at $4,400, then the 100-day SMA near $4,357.

It is broad but tech-led. The S&P 500 is up about 0.49% near 7,704 and the Nasdaq is outperforming at +0.88%, while the Russell 2000 jumped 1.13% at the open on the rate-relief trade, which is a healthy breadth signal. The standout single-stock moves are Snowflake, up more than 20% after a strong quarter that lifted the whole software complex, ChargePoint up over 45%, and Palantir higher on a US Army TITAN contract. Nvidia’s $12.93 billion agreement to buy Hugging Face adds to the AI bid. On the downside, Ultragenyx cratered on a failed Phase 3 trial and Victoria’s Secret, HPE and Ciena all fell.

The same rate-relief trade lifting equities. Softer labour data and Waller’s comments trimmed hike odds, easing the yield headwind that had pinned Bitcoin in a $77,000-$80,000 range through the week; BTC is near $77,900 after opening at $77,310. Dogecoin is up around 2% near $0.0833 on a 13.5% jump in trading volume, reclaiming the $0.0813 level analysts had flagged as the immediate hurdle. Bitcoin ETF flows remain the swing factor — August drew roughly $3.5 billion but sessions have since alternated between inflows and redemptions.

Three things. First, whether the equity and bond rally holds into the close now that ISM services has landed hot on both growth and prices — a fade would suggest the market is re-weighting the inflation side. Second, any further US-Iran headlines, which have moved crude by several percent a day all week and feed straight back into the rate-hike debate through energy inflation. Third, positioning into Friday’s Non-Farm Payrolls at 08:30 ET, which now carries unusual weight after ADP’s 38,000 print and Waller’s explicit data-dependence. Canada’s labour force survey lands the same morning, which matters for the USD/CAD setup.