Over the past week, global markets were buffeted by multiple negative factors: geopolitical conflicts drove up energy inflation, global sovereign bonds faced a collective sell-off, and the Federal Reserve’s alternating hawkish and dovish stances stirred up interest rate hike expectations. The week ultimately concluded with a blockbuster nonfarm payrolls report that far exceeded expectations and extreme threats from Trump.
As the U.S. and Iran exchanged fire again for the first time in a month, both WTI and Brent crude posted their largest weekly gains since late July. However, trading was relatively light on Friday as investors were reluctant to significantly increase their positions ahead of the Labor Day holiday. Under dual pressure from geopolitical conflicts in the Middle East and Europe, prices for refined petroleum products such as diesel continued to climb.U.S. retail diesel prices rose to a record high.
As strong nonfarm payroll data fueled expectations of a Fed rate hike, the three major U.S. stock indices closed lower across the board on Friday, but sharp gains in semiconductors, memory, and optical communications collectively limited the overall decline in the indices.The S&P 500 fell 0.38%, posting a slight weekly gain of 0.09%; the Nasdaq fell 0.29%, rising 0.4% for the week; and the Dow fell 0.51%, declining 0.27% for the week.
Following the release of the nonfarm payrolls data, the yield on the 2-year U.S. Treasury note—which is most sensitive to the Fed’s policy rate—briefly touched 4.42%, hitting its highest level since January 2025, while long-term yields remained largely unchanged during the day.However, amid concerns over energy inflation, fiscal deficits, and massive supply, global long-term government bond yields have recently collectively hit new cycle highs. Japan’s 10-year government bond yield surpassed 3% for the first time, reaching its highest level since 1996.The U.S. 10-year Treasury yield hit 4.82% this week, reaching its highest level since November 2023, with the key 5% threshold now within reach.
Gold prices fluctuated sharply in response to expectations of a Fed rate hike. On Thursday, they surged more than 2% after Fed Governor Waller struck a dovish tone, but less than 24 hours later, “shocking” nonfarm payroll data quickly reversed market expectations.International spot gold prices fell more than 2% at one point on Friday but subsequently rebounded slightly due to pressure from Trump to cut interest rates, ending the week with a modest decline of 0.52%.
In the coming week, the Federal Reserve will enter its quiet period ahead of the September policy meeting, and investors’ attention will shift to the PPI and CPI reports. Additionally, the European Central Bank will announce its interest rate decision.