3rd September 2026 – (New York) Equities climbed on Thursday as government bond yields slipped and traders bet the Federal Reserve will keep interest rates unchanged this month. The S&P 500 added about 0.5 per cent, the Nasdaq Composite gained roughly 0.4 per cent and the Dow Jones Industrial Average rose around 0.6 per cent, or 332 points. The benchmark 10‑year US Treasury yield hovered near 4.75 per cent after briefly touching its highest level since November 2023 a day earlier, with the pullback gathering pace following remarks from Federal Reserve Governor Christopher Waller that he would be inclined to back a pause absent any unpleasant surprises in upcoming inflation data.
Rate‑path expectations softened alongside the move in bonds. Pricing in fed funds futures put the probability of a hike in the coming weeks at about 54.6 per cent after Mr Waller’s comments, down from 63.2 per cent the day before. A firmer Japanese yen contributed to the broader decline in global yields, as the currency rallied more than 1 per cent against the US dollar to trade around ¥156.1, alleviating some of the pressure that had been building in fixed‑income markets.
Energy markets remained a swing factor for risk assets. West Texas Intermediate futures advanced around 1 per cent to roughly US$92 a barrel, while Brent edged higher to above US$96. The recent climb in crude has fuelled concerns that energy costs could re‑accelerate inflation and keep policy tight for longer, though some strategists argued that a sustained yen rebound would, in theory, help cap global yields and support equities. “A stronger JPY could be the thread that helps unravel a lot of the macro overhangs weighing on equities if it continues,” said Adam Crisafulli of Vital Knowledge, noting the potential for an easing in rate pressures if currency dynamics persist.
Company news helped set the tone. Snowflake surged more than 23 per cent after delivering better‑than‑expected quarterly results and guidance, while Broadcom slipped nearly 4 per cent as its outlook disappointed some investors. The moves followed a firmer prior session in which the major indices snapped a three‑day losing streak amid a brief respite in yields. The 2‑year Treasury yield touched 4.41 per cent, its highest since January 2025, before easing back, and the 10‑year briefly reached 4.818 per cent, a level last seen in November 2023.
Currency markets reflected the shift in risk appetite. The US Dollar Index dipped below 99, its lowest in more than a week, with the greenback sliding almost 2 per cent at one point against the yen to around ¥155.50, the sharpest daily fall since late July. The broader move in the dollar coincided with a moderation in yields and improving sentiment across equities.
Fresh US data painted a mixed macro picture. Initial jobless claims ticked up slightly to a seasonally adjusted 206,000 for the week ending 29th August, with continuing claims edging higher to 1.78 million. The trade deficit widened 24.4 per cent in July to US$88.6 billion, the largest since March 2025, driven by a jump in capital‑goods imports tied to ongoing investment in artificial‑intelligence infrastructure, including increases in computers, accessories and semiconductors. The gap with Mexico expanded notably, while the shortfall with Canada narrowed.
Policymakers continued to emphasise that tighter financial conditions reflect a still‑resilient economy. New York Fed President John Williams said higher yields partly mirror solid growth prospects following a strong corporate earnings season. In energy, market attention remained fixed on Middle East risks after further US strikes on Iran, with Energy Secretary Chris Wright telling CNBC this week that more than 17 million barrels transited the Strait of Hormuz on Monday, underscoring supply‑route sensitivity to geopolitical developments.
Elsewhere, commentary from market veterans suggested the relief from softer yields may be fragile. Jay Hatfield of Infrastructure Capital Advisors said oil remains a key driver for equities in a seasonally weaker period, while Ben Emons of FedWatch Advisors argued that the recent rise in longer‑dated yields implies markets may be underpricing the cumulative amount of tightening still embedded in rate expectations over a longer horizon.
