Chris Weston

The Daily Fix: Nasdaq at New Highs as Crude Slides and Crypto Rallies are Good to Chase Asia cranks up with futures markets indicating a modestly positive open for both the ASX and Hang Seng, while the NKY225 remains closed for its final holiday before coming back online tomorrow. We expect a strong reopening in Japan tomorrow given the leads and the developments that need to be priced on the first day back. A combination of another move lower in crude, calm conditions in rates and Treasuries, and the Nasdaq cash and futures markets printing all-time highs continues to offer a supportive backdrop for risk. Memory stocks have taken the leadership baton, backed by another strong session for semi's, which have recorded a sixth consecutive day of gains. Notably for the ASX200, materials were the best-performing sector in the S&P 500. Trump-Xi summit comes into view Markets are gearing up for tomorrow's summit between Trump and Xi, and we'll see whether the meeting produces anything inspiring, but importantly, tangible enough to keep risk pushing higher. For now, semiconductors and memory remain at the centre of the equity conversation. With Meta's Connect event tonight and Mark Zuckerberg delivering the keynote, we'll see whether the expected announcements are largely priced after the explosive move in Meta and the subsequent rotation into other CPU plays, or whether we see a sell-the-fact reaction. Flows into the Nasdaq have certainly been elevated, and momentum players continue to chase the move higher. However, with the market at all-time highs after such a strong run, we should increasingly expect better two-way flow. Crude remains a tailwind for risk Headlines have centred on diplomatic talks between the US and Iran, with Iran also proposing a scenario that could see the Strait of Hormuz reopen, although the conditions attached remain significant. Markets have reacted by adding to crude shorts, but there is little conviction yet that these developments will materially alleviate supply constraints. That said, Brent futures has printed another lower low, with momentum and price action firmly skewed to the downside. Brent futures volumes are running around 36% above the 30-day average, suggesting healthy participation behind the move. Lower crude has been a tailwind for risk, although the move has only pushed two-year inflation swaps around two basis points lower. Treasury yields are largely unchanged across the curve, while interest rate pricing has seen limited adjustment. Risk markets would ideally like to see a faster rate of change lower in crude before becoming more convinced that this is a lasting macro tailwind. A corresponding decline in diesel and gasoline prices would further strengthen that argument. FX remains contained ahead of PMIs The lack of movement across the Treasury curve has kept FX markets relatively contained, with mixed performance across the G10 complex. In the session ahead, we get manufacturing and services PMIs from the US, UK and Europe. Whether these releases materially move expectations around central bank policy remains to be seen. Positioning has increasingly moved short EUR, with EURUSD looking vulnerable and the price action in EURNZD looking particularly precarious. After the recent move higher, comments from RBNZ Governor Breman have resonated, and I see the balance of risk increasingly skewed lower in EURNZD. We're trading this cautiously from the short side. Copper takes the metals spotlight Gold has taken something of a back seat once again, but copper has stepped up and is testing all-time highs, with tight supply in China playing an important role in driving the move higher. For momentum traders, copper remains firmly on the radar, particularly if we can see a clean break and acceptance above the prior highs. Bitcoin's breakout finds support Crypto is once again attracting greater attention from clients. Bitcoin has pulled back modestly from its recent high of $87,389, but the important observation is how readily buyers have supported the dips following the breakout from the previously defined trading range. With pricing as little above $86,000, the estimated average US spot Bitcoin ETF holder is now comfortably back in unrealised profit, with the aggregate cost basis estimated around $82,000. Bitcoin treasury companies have an estimated average cost basis closer to $80,400. That dynamic is worth considering. Institutional investors typically want to increase exposure to investments where the thesis is working. Having endured a meaningful drawdown, I don't necessarily see the move back above aggregate break-even as an obvious trigger to take profit. If the investment thesis is gaining traction, flows are improving and price is trending higher, institutions may instead become more comfortable adding to winning positions. We're also seeing systematic and momentum-based accounts increasingly attracted to the move. The bigger move is happening beyond Bitcoin Perhaps the more interesting development is what's happening further out on the crypto risk curve. Recent regulatory developments around tokenised markets and real-world asset perpetual futures arguably have greater direct implications for smart-contract networks and the infrastructure supporting on-chain finance than they do for Bitcoin itself. The SEC's developments around tokenised securities have strengthened the prospect of genuine financial assets increasingly trading through blockchain infrastructure. At the same time, the continued development of perpetual futures across real-world assets is bringing crypto-native market structure into traditional finance. This is where Ethereum, Solana and other native blockchain tokens become particularly interesting. If equities, bonds, collateral, stablecoins and derivatives increasingly trade and settle on-chain, then the critical investment question becomes which networks capture that activity and how effectively increased volumes translate into fees, staking demand and ultimately value for the native token. We're already seeing significant gains across this part of the crypto complex, and the long positions have worked extremely well. After such a strong run, some short-term consolidation would be entirely reasonable, but the underlying momentum remains compelling and pullbacks continue to be where my interest lies. Good luck to all.

The Daily Fix: Meta Lights the Fuse on the AI Trade It’s been a solid session for risk, with a gentle sea of green rolling across various parts of the risk spectrum. The combination of Meta Muse iinjecting a new shot of confidence in the CPU demand profile, lower crude prices, falling Treasury yields and optimism towards the US-China summit have supported the move. Brent futures are down 3.6% and trading below last week’s lows, while the US 10-year Treasury yield is five basis points lower, taking some pressure out of the discount-rate story. With Friday's OPEX behind us, the roll past options expiration would have cleaned up some unwanted dealer positioning, giving the market greater freedom to move more aggressively. That direction has firmly been higher, with the Nasdaq cash closing up 2.8% and the S&P 500 gaining 1.5%. S&P futures have pushed to fresh all-time highs, and given the current flows, it may not be too long before both the Nasdaq and S&P cash indices are challenging their respective highs as well. Meta drives the AI trade Another piece of the AI monetisation puzzle has fallen into place, firmly supporting the mega-cap and high-index-weighting names. Meta is clearly at the centre of the market’s thought process for putting on risk. The excitement around Meta Muse is adding weight to the idea that millions of people could eventually use persistent AI agents. More agent adoption means more inference and workloads, more data-centre compute and, ultimately, greater demand for CPUs. Meta’s developments have therefore been a key catalyst behind the semiconductor rally. Meta rallied 11.4% on volume of 48.6 million shares, 178% above its 30-day average. But it is the flow-on effects that have really caught the market’s attention. CPU demand becomes the hot AI theme Intel closed up 12.1%, with 190.2 million shares changing hands, 85% above its 30-day volume average. Intel remains the largest x86 server CPU supplier by units, so a market increasingly focused on greater CPU demand naturally provides a strong read-through. AMD also posted staggering gains on huge volume, given its position as a major server CPU provider and Intel competitor. Nvidia is a less direct beneficiary, although Grace and its next-generation Vera CPU provide another avenue through which increased agentic AI compute demand could support future earnings. Arm closed up 17%. While Arm does not manufacture CPUs directly, it designs and licenses the architecture and CPU IP used by other companies, meaning it stands to benefit as more Arm-based server processors are deployed. Qualcomm is a newer entrant to the data-centre CPU market, but the market gave it plenty of love as well, as traders broadened their exposure to the potential beneficiaries of increased agentic AI compute demand. Index concentration remains powerful Despite the Nasdaq gaining 2.8%, underlying breadth was uninspiring, with 58% of S&P 500 companies closing higher. But when the largest index weights are moving with this sort of strength, it is not difficult to see how the broader indices can rally and continue higher as investors chase performance. We can see that appetite in options flows, with a punchy 6.5 million S&P 500 options traded, with a solid skew towards upside calls. Some 3.58 million calls changed hands across different expiries, highlighting the increased appetite for upside exposure. Crypto comes alive The goodwill towards equity risk has also spilled into crypto. There were already structural tailwinds from recent regulatory developments and growing momentum in the evolution of tokenised markets, reinforcing the idea that crypto is increasingly evolving into an infrastructure play rather than simply a standalone financial asset. Blockchain rails are becoming increasingly intertwined with some of the strongest areas of financial product innovation, bringing crypto infrastructure closer to the traditional tradable world. Against that backdrop, improved risk sentiment has combined with bullish technical breaks across a number of coins. Recent consolidation highs have been taken out, encouraging more price-sensitive participants to buy into strength and helping perpetuate the move higher. Gold struggles for attention There has been little love for gold despite the modest pullback in Treasury yields and a mixed reaction in the US dollar. Perhaps investors simply see better opportunities elsewhere. Markets displaying strong range expansion, a high rate of change and powerful upside momentum are attracting capital, while gold currently lacks those characteristics. Asia takes the baton Attention now turns to Asia and whether regional markets can build on the positive lead. Japan’s cash market remains closed, although given the strength in US technology and semiconductor stocks, it would likely have been a closely watched market had it been open. Our opening calls for the ASX 200 and Hang Seng are relatively sanguine, with both currently indicated around 0.3% higher. There has been a healthy combination of tailwinds supporting risk through the session. The question now is whether Asian equities can take the baton and provide another leg higher for Nasdaq and S&P futures. Good luck to all. #meta

The Daily Fix: A Post-Fed Reversal in Risk As has been the way after numerous Fed meetings over the past 12 months, the initial move in rates, Treasuries and broader macro markets failed to hold, and once the clearing event passed and positioning adjusted, risk assets have reversed higher, with market players scratching around for potential reasons to explain the improved tone. Whether that reversal reflects a sense that the Federal Reserve have regained a degree of credibility, or whether it was driven by the rally in long-end bonds following the Bank of England’s decision to review its long-end gilt QT sales, positioning ahead of today’s triple witching across US options, or the decline in crude through much of EU trade, the catalyst is ultimately secondary - What matters most is the price action. Nasdaq Buyers Step Back In Nasdaq futures initially fell to 28,763 in response to the Fed meeting, threatening to finally break the defined trading range that has held since August and potentially open a move towards 28,000 and below. Instead, the buyers stepped in and drove the close back inside the range and above the range lows printed on 14 September. That buying has extended, with futures closing above the highs of the previous three sessions and reclaiming both the 50-day and 100-day moving averages. Both S&P 500 and NAS100 futures have broken the sequence of lower highs, and the downtrend drawn from the 8 September highs. The focus now shifts to whether recent swing highs of 29,764 in Nasdaq futures and 7,764 in S&P futures can be taken out to the topside. Should the bulls extend the move after today’s options expiry, then despite sentiment remaining far from exuberant, a renewed push towards the highs becomes increasingly plausible. The Magnificent Seven trade has also re-emerged, while various parts of the AI complex have attracted better buying. The question is whether that momentum can carry through Asia and into the US session, with the Nikkei 225 also set for a stronger open. Bonds Provide a Tailwind for Risk Equity buyers have taken some comfort from the move in yields across the US Treasury curve, with the 10-year yield falling from 4.99% to 4.93%. The move in UST yields was helped by what markets saw as a dovish hold from the Bank of England, alongside a deeper review of its QT program. UK 30-year gilts rallied strongly on the development, with those flows seemingly spilling into US Treasuries and other developed-market government bonds. US short-term rates have responded with 10 basis points of implied future Fed tightening has been removed from terminal-rate pricing, although interest-rate swaps still imply around a 54% probability of another Fed hike in October and approximately 32 basis points of cumulative tightening from the Fed by December. US Dollar Holds Firm The US dollar has held up well despite the decline in Treasury yields and real rates. USDCAD closed higher for an eighth consecutive session, while GBPUSD was sold into strength following the Bank of England decision, and those short GBP will now be watching for a potential break below 1.3300. Through Asia, the focus shifts towards the AUD and JPY. RBA Governor Michele Bullock is due to speak momentarily, with her comments needing to be reconciled against a swaps market carrying a high degree of conviction around further RBA tightening at the upcoming meeting on 29 September. The Bank of Japan Takes Centre Stage The Bank of Japan meets later today, with markets firmly expecting a 25-basis-point hike. Given the degree of pricing, the rate decision itself may have limited impact on the yen. Instead, attention should fall on the forward swaps curve and the Bank’s guidance around the pace and urgency of further tightening. Governor Ueda’s press conference will therefore be key. The market will be looking for confirmation that further normalisation remains firmly on the table, while assessing whether the Bank sees any urgency to move again. USDJPY has pulled back from above 156 but continues to eye a re-engagement with that level. With speculative long-yen positioning having built recently, an upside break through 156.50 could encourage some of those positions to be reduced. Crude Volatility Remains Elevated Crude found sellers through much of the Asian, European and early US sessions, with Brent falling from around $106 to a low near $101.53. President Donald Trump subsequently added another layer of uncertainty, signalling that a significant announcement concerning Iran could be forthcoming. Crude quickly reversed a large portion of its earlier decline and has since oscillated around $104. The geopolitical headline risk remains significant, and with oil still highly sensitive to developments around Iran, traders should expect intraday volatility to remain elevated. Gold Buyers Regain Control Gold also had a strong session, producing a clear low-to-high trend through much of the day. XAUUSD rallied from around 4,260 during Asian trade to a high near 4,380 before giving back some of those gains later in the session. The combination of lower Treasury yields, softer real rates and continued geopolitical uncertainty provided support, although the late reversal in crude may have contributed to some profit-taking near the highs. What Matters From Here The broader tone has improved, with buyers returning to several higher-beta areas of the equity market and the MAG7 finding renewed support. For Asia, the immediate focus falls on Governor Bullock’s comments and the Bank of Japan meeting. Beyond that, the key question for US trade is whether the equity recovery can build after options expiry, whether US dollar demand persists, and whether Treasury yields continue lower. If bonds reverse and yields push higher again, volatility could quickly return. For now, though, the buyers have regained some control, and the price action suggests the post-Fed risk-off move has lost momentum. Good luck to all.

The Daily Fix: A Post-Fed Reversal in Risk As has been the way after numerous Fed meetings over the past 12 months, the initial move in rates, Treasuries and broader macro markets failed to hold, and once the clearing event passed and positioning adjusted, risk assets have reversed higher, with market players scratching around for potential reasons to explain the improved tone. Whether that reversal reflects a sense that the Federal Reserve have regained a degree of credibility, or whether it was driven by the rally in long-end bonds following the Bank of England’s decision to review its long-end gilt QT sales, positioning ahead of today’s triple witching across US options, or the decline in crude through much of EU trade, the catalyst is ultimately secondary - What matters most is the price action. Nasdaq Buyers Step Back In Nasdaq futures initially fell to 28,763 in response to the Fed meeting, threatening to finally break the defined trading range that has held since August and potentially open a move towards 28,000 and below. Instead, the buyers stepped in and drove the close back inside the range and above the range lows printed on 14 September. That buying has extended, with futures closing above the highs of the previous three sessions and reclaiming both the 50-day and 100-day moving averages. Both S&P 500 and NAS100 futures have broken the sequence of lower highs, and the downtrend drawn from the 8 September highs. The focus now shifts to whether recent swing highs of 29,764 in Nasdaq futures and 7,764 in S&P futures can be taken out to the topside. Should the bulls extend the move after today’s options expiry, then despite sentiment remaining far from exuberant, a renewed push towards the highs becomes increasingly plausible. The Magnificent Seven trade has also re-emerged, while various parts of the AI complex have attracted better buying. The question is whether that momentum can carry through Asia and into the US session, with the Nikkei 225 also set for a stronger open. Bonds Provide a Tailwind for Risk Equity buyers have taken some comfort from the move in yields across the US Treasury curve, with the 10-year yield falling from 4.99% to 4.93%. The move in UST yields was helped by what markets saw as a dovish hold from the Bank of England, alongside a deeper review of its QT program. UK 30-year gilts rallied strongly on the development, with those flows seemingly spilling into US Treasuries and other developed-market government bonds. US short-term rates have responded with 10 basis points of implied future Fed tightening has been removed from terminal-rate pricing, although interest-rate swaps still imply around a 54% probability of another Fed hike in October and approximately 32 basis points of cumulative tightening from the Fed by December. US Dollar Holds Firm The US dollar has held up well despite the decline in Treasury yields and real rates. USDCAD closed higher for an eighth consecutive session, while GBPUSD was sold into strength following the Bank of England decision, and those short GBP will now be watching for a potential break below 1.3300. Through Asia, the focus shifts towards the AUD and JPY. RBA Governor Michele Bullock is due to speak momentarily, with her comments needing to be reconciled against a swaps market carrying a high degree of conviction around further RBA tightening at the upcoming meeting on 29 September. The Bank of Japan Takes Centre Stage The Bank of Japan meets later today, with markets firmly expecting a 25-basis-point hike. Given the degree of pricing, the rate decision itself may have limited impact on the yen. Instead, attention should fall on the forward swaps curve and the Bank’s guidance around the pace and urgency of further tightening. Governor Ueda’s press conference will therefore be key. The market will be looking for confirmation that further normalisation remains firmly on the table, while assessing whether the Bank sees any urgency to move again. USDJPY has pulled back from above 156 but continues to eye a re-engagement with that level. With speculative long-yen positioning having built recently, an upside break through 156.50 could encourage some of those positions to be reduced. Crude Volatility Remains Elevated Crude found sellers through much of the Asian, European and early US sessions, with Brent falling from around $106 to a low near $101.53. President Donald Trump subsequently added another layer of uncertainty, signalling that a significant announcement concerning Iran could be forthcoming. Crude quickly reversed a large portion of its earlier decline and has since oscillated around $104. The geopolitical headline risk remains significant, and with oil still highly sensitive to developments around Iran, traders should expect intraday volatility to remain elevated. Gold Buyers Regain Control Gold also had a strong session, producing a clear low-to-high trend through much of the day. XAUUSD rallied from around 4,260 during Asian trade to a high near 4,380 before giving back some of those gains later in the session. The combination of lower Treasury yields, softer real rates and continued geopolitical uncertainty provided support, although the late reversal in crude may have contributed to some profit-taking near the highs. What Matters From Here The broader tone has improved, with buyers returning to several higher-beta areas of the equity market and the MAG7 finding renewed support. For Asia, the immediate focus falls on Governor Bullock’s comments and the Bank of Japan meeting. Beyond that, the key question for US trade is whether the equity recovery can build after options expiry, whether US dollar demand persists, and whether Treasury yields continue lower. If bonds reverse and yields push higher again, volatility could quickly return. For now, though, the buyers have regained some control, and the price action suggests the post-Fed risk-off move has lost momentum. Good luck to all.

📽️Thoughts on the Fed meeting, and what went down in markets https://t.co/EyEqhQiDGR

The Daily Fix: Risk Markets Lack Conviction as Brent Eyes $100 and Markets Await US Inflation Data The lead flow and sentiment heading into the Asian trading session are hardly inspiring, with a damp and soggy feel to proceedings. Our opening calls for the ASX 200, Nikkei 225 and Hang Seng reflect that mood, with a mixed picture expected across the three major indices, although the net and percentage changes on the open should be fairly uneventful. We will see whether a skew in the order flow builds after the open, but across several of the major macro markets we see indecision in the price action, tight ranges and a general holding/consolidation pattern. The macro backdrop continues to offer a modest net negative for risk appreciation, although we have seen only a limited pick-up in hedging activity and demand for volatility. There are certainly no obvious signs that traders are positioning aggressively for a major risk reduction or volatility shock. Brent crude eyes the $100 level The various cross-currents across crude and energy markets continue to escalate, with front-month Brent crude trading as high as $99.46, just shy of the $100 level. Pricing subsequently pulled back towards $97, but it did not stay there for long, with buyers driving Brent back towards $99 and above. $100 now feels like a highly achievable level, even with positioning already heavily skewed towards crude longs. We have also seen a sizeable widening in the premium of front-month Brent crude futures relative to the six and 12-month contracts, with that prompt spread increasingly attracting the attention of energy traders. Interestingly, we have seen only modest buying of crude volatility, although demand has been more pronounced in WTI than Brent. So far, the move in crude has not materially derailed risk sentiment across other asset classes. #Gold breaks lower after a heavy session Gold came off early highs of 4442 through Asia before flatlining through much of the European and US sessions in a tight range. Sellers subsequently took control as the US main session got underway, with gold breaking lower from $4383 and closing relatively close to the session lows. The question now is whether that selling develops into something more persistent, particularly with several major US macro catalysts approaching. US equities offer a mixed signal for Asia The equity story was mixed. Nasdaq futures traded within a 29,424 to 29,764 range, with indecision evident at the index level. Nvidia fell around 2%, subtracting points from the broader index, although those losses were partially offset by gains in AMD, Intel and buying in Oracle ahead of its earnings on Thursday after the market close. Software names closed lower, but semiconductors performed relatively well overall, with the SMH ETF gaining more than 1%. Intel has certainly moved onto the radar at a single-stock level. While sellers emerged around the 100-day moving average, a 9.1% gain on the day will always attract attention, particularly with trading volumes running around 35% above the 30-day average. It is one to keep on the radar. Across the broader sector landscape, however, there was plenty of red, which does little to inspire the Asian equity handover. Energy was the clear outperformer given the moves in crude, while utilities also attracted buyers. Rates remain the dominant force in FX In FX, the USD continues to eye developments in the rates complex - that said, there has been little meaningful adjustment in USD OIS to positioning or expectations around the September FOMC meeting, with markets continuing to imply around a 60% probability of a rate hike. US two-year Treasury yields have three basis points, providing some support for the US dollar, while the back end of the Treasury curve is largely unchanged. That relative stability in long-end yields may partly reflect expectations ahead of the start of the Treasury buyback operation, which is rolled out in the session ahead. There is some conjecture around whether we could see a buy-the-rumour, sell-the-fact dynamic play out, given that expectations have already helped contain long-end rates and push swap spreads wider. The market has expectations around the absolute level of buybacks, so the amount ultimately purchased will be closely watched. If the Treasury wants to make a statement, the scale of today's operation could be important. USD/JPY tests whether a tradable low is forming The DXY traded in a tight 98.71 to 99.00 range, with limited directional conviction. The bigger focus remains on yen crosses. USD/JPY traded to a low of 152.89 before buyers stepped in aggressively, driving the pair back to close around 153.99. For some, that price action may suggest we are forming a bottom and potentially a tradable low after the sharp decline from 160 over the past five sessions. I am less convinced and want the market to prove that buyers are genuinely prepared to defend these levels. For me, that requires USD/JPY to move through and close above Tuesday's high of 154.42. A break through that level could trigger fresh buy orders and provide greater confidence that momentum can extend back towards 156. For now, however, traders who bought below 154 and into the 153 handle are starting to move underwater as Asian trade ramps up. A break through 153.50 could force some of those buyers to cover positions, potentially perpetuating another leg lower. NZD/JPY has been the notable underperformer, although the move has already been violent and rapid. Some traders will inevitably be looking to take profits and cover shorts at these levels. For those still holding longs, however, the speed of the decline will have done considerable damage to confidence. EUR/USD remains a range trade EUR/USD continues to trade in a tight range, with indecision evident on the daily chart. Ideally, we remain contained within Tuesday's 1.1584 to 1.1614 range. To establish a stronger directional bias, we need to see a convincing closing break on either side of those levels. Until then, a tight two-way trading approach within the range remains the preferred playbook. The catalysts now come into view There is little on the Asian data calendar that should materially concern markets today, leaving Brent crude as one of the clearest real-time signals for sentiment. Alerts will no doubt start firing if Brent breaks through $100, while flows across Asian equities and Shanghai gold futures will also command attention. From here, the event risk builds considerably. Treasury buybacks, US PPI and CPI inflation will shape the rates debate and expectations for the September FOMC meeting. Thursday's ECB meeting offers another potential source of volatility, while Oracle's earnings provide a significant corporate catalyst. For now, conviction is limited and markets remain caught between competing forces. The risk backdrop is hardly constructive, but importantly, we are not yet seeing the kind of hedging, volatility demand or positioning that would suggest traders are preparing for a genuine risk event. Good luck to all.

The Daily Fix: Warsh Rewrites the September Playbook Fed Chair Kevin Warsh’s speech at Jackson Hole (on Friday) has kicked the hornet’s nest and set up what should be an interesting couple of weeks, as market players react to incoming US tier one data and recalibrate interest rate pricing accordingly ahead of the Fed meeting on 16 September. USD Interest rate swaps pricing now implies 17 basis points of assumed hikes for September, equating to a 66% implied probability of a 25bp hike at the September FOMC meeting. The October FOMC meeting implies a 90% probability of a hike, while December pricing has moved to a cumulative 38 basis points, equivalent to 1.5 25bp hikes. This Friday’s US nonfarm payrolls report, potentially reinforced by the ISM manufacturing and services surveys and the JOLTS report, will move that pricing. However, it is next week’s US core CPI and PPI numbers that should really shape the debate and either galvanise the belief that the Fed is preparing for lift-off or see that pricing reduced, with the consensus view still looking for rates to remain on hold. A lively September for central banks It is not just the Fed that traders need to consider. On Wednesday, the RBNZ should almost certainly raise rates to 2.75%, with NZD IR swaps pricing a 95% probability of a hike. The ECB meeting on 10 September is also seen as an almost certain rate hike. With European inflation dynamics coming through this week, that probability may be massaged around the edges. The RBA is an interesting one, with its meeting on 29 September currently priced as a line-ball call, with a 47% probability of a hike. The next monthly CPI read isn't seen until the day after the RBA meeting, so this Wednesday’s GDP print could matter more to market pricing. A softer first-quarter growth print could see that pricing come down. Conversely, a hotter number, particularly if consumption patterns remain firm, could increase the market’s conviction that the RBA will need to hike. The Bank of Japan meets on 18 September, and the market is firmly of the belief that it will raise rates, with an implied probability of 85%. This week, we will be listening closely to Bank of Japan Governor Takata, who may offer some guidance around that prospect. Scott Bessent has also been leaning on the Bank of Japan to do the right thing. USDJPY is breaking upside levels and grinding higher, but its unclear that a 25bp hike from the BOJ will do much to promote better buying of JPY. It certainly sets us up for what could be a very lively September for central banks and potential monetary tightening, but ultimately the data will decide. US Payrolls take centre stage The major event risk this week is Friday’s non-farm payrolls report. The unemployment rate is expected to remain unchanged at 4.1%, while net jobs created are expected to recover to 55,000 after the US economy lost 23,000 jobs in the previous report. As always, the range and distribution of estimates from economists are wide. Another factor is revisions. Despite the personnel and methodology changes within the organisation, significant revisions remain a major feature of the payrolls release and need to be considered when interpreting the headline number. Should we get an inline payrolls print that does not give the Fed too much to work with, next week’s core CPI report will become the major decider for the market’s Fed belief system. The volatility priced around that outcome across rates, FX and equities could therefore be significant. Debasement trades meet higher yields This represents a new dynamic for markets. Last week, flows centred heavily on the debasement trade, with crypto and gold flying. We also saw strong inflows into ETFs, which ultimately came full circle as systematic flows chased prices higher. However, Friday delivered a significant 11 basis point move higher in two-year Treasury yields. The question now is whether that move can continue and push the two-year through 4.37%, the 23 July high. We are also looking towards the back end of the US Treasury curve and whether 10-year and 30-year Treasury yields can continue building higher and potentially retest the Bessent buyback thresholds... Equities open modestly in the red The open today has been fairly sanguine, although we have seen some life in Nasdaq futures. Earnings also remain in focus this week. Dell is one to watch after coming off the highs following a breathtaking year. Broadcom reports later in the week, which could spur further moves across the chip complex. Options price an implied move of 6.3% up or down around its earnings. While Broadcom itself may not have the same market-wide influence as some of the other mega-cap names, the read-through for semiconductors and AI-related exposures will still be closely watched. For Nasdaq futures, I remain guided by price. A breakdown through the recent swing low of 28,946 could suggest a continuation of the drawdown and bring further sellers into the market. The bulls need a break of last week’s high of 29,811 to get the party started and provide a cleaner setup to chase the move from the long side. S&P 500 futures have opened modestly lower after another week of very tidy, tight ranges. Again, we have clearly defined levels from which to manage risk. Oil tests the $90 ceiling Energy markets have attracted plenty of attention this morning, with headlines flying across the screens shortly before the futures reopen. The gap higher in Brent and WTI was fairly uneventful, although we did see some decent oil flow coming through. Brent front-month was capped at $90 on both Thursday and Friday, and we have tested that level again today. Sellers and better supply emerged into the figure and pushed price back below $90. We will see how Asian and European traders take in and position for the news flow through the session, but a closing break above $90 (Brent futures) could see momentum build and bring further buyers into the market. For now, the latest news flow does little to accelerate diplomatic talks, but traders are not showing any major surprise at the developments and are trading the headlines accordingly. September begins with the data in control We turn the page on month-end and head into a data-dependent, central bank-focused September. With multiple central banks potentially tightening policy, US labour and inflation data taking on renewed significance, Treasury yields testing important levels and geopolitical risk remaining elevated, there is plenty for traders to navigate. Good luck to all.

📽️Trader Thoughts: What went down on the day in equity, rates, commodities and FX.

The Daily Fix: Gold testing $4400 as bullish momentum and flows align Gold has firmly moved back onto traders' radar. Having broken out of the consolidation range that held from late June through to 3 August, both gold (XAU) and silver (XAG) have staged an impulsive rally, with XAU now testing US$4,400. The breakout above the July highs has been accompanied by strong range expansion and decisive buying pressure, with the subsequent momentum portraying that the bulls are in control. Client activity has also picked up, with positioning skewed to the long side. 60% of all open XAU positions are now held long, with traders looking to capture further upside and ride the trend higher. The technical breakout In COMEX gold futures, we saw strong volume accumulation overnight around US$4,424, laying the foundation for a further US$20 advance. However, the real catalyst came when Friday's post-non-farm payrolls high at US$4,432 gave way. Price subsequently pulled back to successfully retest that former resistance to confirm as support before buyers stepped back in to drive another leg higher. It was a textbook breakout and retest, with spot gold (XAU) moving higher in tandem. Why this rally looks different One of the more interesting aspects of this move is that gold is rallying while crypto has struggled to generate similar upside momentum. That suggests this is not simply a broad-based currency debasement trade, but one driven by more idiosyncratic factors specific to the precious metals complex. Equally notable is that gold has appreciated despite a firmer US dollar and a 5% rally in crude oil. Those traditional relationships have temporarily broken down, indicating that asset-specific flows are proving to be the dominant driver. Flows continue to improve The flow picture has become increasingly supportive. The GLD ETF has now recorded a sustained run of inflows, while buying has also extended into gold miners, particularly junior miners through the GDXJ ETF, which has rallied strongly over the past five trading sessions. Positioning has also shifted materially in the options market. One-month 25-delta risk reversals have moved from around -4 vols to +2 vols, meaning one-month calls now trade at a premium to equivalent puts. Upside call skew is also evident across multiple expiries. That suggests investors are increasingly willing to pay for upside exposure. If dealers have been the primary sellers of those calls, they are likely running a net short gamma position, which can be seen in the GLD options profile, with heavy open interest (and gamma) at $405 and $409 (GLD closed at $402.54). As gold rallies and option deltas increase, dealers must buy additional gold futures to maintain a delta-neutral book. That hedging activity can reinforce the existing trend by creating incremental buying pressure as prices rise. At the same time, CTA and other systematic momentum funds are now increasing long gold exposures. As momentum strengthens, their models are likely to trigger further buying, adding another layer of demand to the market. Rates remain supportive The interest rate backdrop has also become increasingly constructive for gold. US two-year real Treasury yields have fallen from 2.37% to 2.00%, providing a meaningful tailwind. Gold has maintained a strong inverse relationship with real yields, and this latest decline has coincided with the recent rally. The US 2s30s Treasury curve has steepened from around 65 basis points to 100 basis points and is threatening to break to fresh cycle highs. Much of that steepening has been driven by the outperformance from the US two-year treasury, as markets scale back expectations on the extent of future Fed tightening. Tomorrow's US core CPI report poses a near-term risk for XAU positioning, but an outcome below 2.5% would no doubt keep the push towards $4500 in check. That shift is also reflected in the Citigroup Economic Surprise Index, which has fallen sharply from 62 on 24 June to around 27, indicating that US economic data has increasingly undershot consensus expectations. While the US economy remains resilient, signs of moderating growth and reduced expectations for additional rate hikes have encouraged investors to increase exposure to gold. Central bank demand remains a powerful tailwind Central bank buying continues to underpin the longer-term bull case. China reported purchasing around 20 tonnes of gold in July, marking its largest monthly addition since October 2023 and extending its buying streak to 21 consecutive months. China is not alone. Poland has remained an active buyer, Tanzania continues to accumulate reserves, and South Korea recently announced plans to begin purchasing domestically refined gold for the first time since 1967. The latest World Gold Council central bank survey also highlights the strength of official sector demand. Of the 74 central banks surveyed, 45% indicated they expect to increase gold's share of reserves over the next 12 months, the highest proportion since the survey began in 2018. The outlook The combination of improving positioning, supportive flow dynamics, lower real yields, a steeper yield curve, easing Fed expectations and persistent central bank buying has helped propel gold back towards US$4,400. The question now is whether the market has sufficient momentum to push through US$4,500 and ultimately challenge the highs seen during April and May near US$4,800. No one knows whether that will happen. However, when technical breakouts align with supportive macro fundamentals and powerful flow dynamics, trends can often extend much further than many expect. Gold has firmly moved back into that conversation. Time to back up the truck, gold got game... #gold #gld #silver

The Daily Fix: Gold testing $4400 as bullish momentum and flows align Gold has firmly moved back onto traders' radar. Having broken out of the consolidation range that held from late June through to 3 August, both gold (XAU) and silver (XAG) have staged an impulsive rally, with XAU now testing US$4,400. The breakout above the July highs has been accompanied by strong range expansion and decisive buying pressure, with the subsequent momentum portraying that the bulls are in control. Client activity has also picked up, with positioning skewed to the long side. 60% of all open XAU positions are now held long, with traders looking to capture further upside and ride the trend higher. The technical breakout In COMEX gold futures, we saw strong volume accumulation overnight around US$4,424, laying the foundation for a further US$20 advance. However, the real catalyst came when Friday's post-non-farm payrolls high at US$4,432 gave way. Price subsequently pulled back to successfully retest that former resistance to confirm as support before buyers stepped back in to drive another leg higher. It was a textbook breakout and retest, with spot gold (XAU) moving higher in tandem. Why this rally looks different One of the more interesting aspects of this move is that gold is rallying while crypto has struggled to generate similar upside momentum. That suggests this is not simply a broad-based currency debasement trade, but one driven by more idiosyncratic factors specific to the precious metals complex. Equally notable is that gold has appreciated despite a firmer US dollar and a 5% rally in crude oil. Those traditional relationships have temporarily broken down, indicating that asset-specific flows are proving to be the dominant driver. Flows continue to improve The flow picture has become increasingly supportive. The GLD ETF has now recorded a sustained run of inflows, while buying has also extended into gold miners, particularly junior miners through the GDXJ ETF, which has rallied strongly over the past five trading sessions. Positioning has also shifted materially in the options market. One-month 25-delta risk reversals have moved from around -4 vols to +2 vols, meaning one-month calls now trade at a premium to equivalent puts. Upside call skew is also evident across multiple expiries. That suggests investors are increasingly willing to pay for upside exposure. If dealers have been the primary sellers of those calls, they are likely running a net short gamma position, which can be seen in the GLD options profile, with heavy open interest (and gamma) at $405 and $409 (GLD closed at $402.54). As gold rallies and option deltas increase, dealers must buy additional gold futures to maintain a delta-neutral book. That hedging activity can reinforce the existing trend by creating incremental buying pressure as prices rise. At the same time, CTA and other systematic momentum funds are now increasing long gold exposures. As momentum strengthens, their models are likely to trigger further buying, adding another layer of demand to the market. Rates remain supportive The interest rate backdrop has also become increasingly constructive for gold. US two-year real Treasury yields have fallen from 2.37% to 2.00%, providing a meaningful tailwind. Gold has maintained a strong inverse relationship with real yields, and this latest decline has coincided with the recent rally. The US 2s30s Treasury curve has steepened from around 65 basis points to 100 basis points and is threatening to break to fresh cycle highs. Much of that steepening has been driven by the outperformance from the US two-year treasury, as markets scale back expectations on the extent of future Fed tightening. Tomorrow's US core CPI report poses a near-term risk for XAU positioning, but an outcome below 2.5% would no doubt keep the push towards $4500 in check. That shift is also reflected in the Citigroup Economic Surprise Index, which has fallen sharply from 62 on 24 June to around 27, indicating that US economic data has increasingly undershot consensus expectations. While the US economy remains resilient, signs of moderating growth and reduced expectations for additional rate hikes have encouraged investors to increase exposure to gold. Central bank demand remains a powerful tailwind Central bank buying continues to underpin the longer-term bull case. China reported purchasing around 20 tonnes of gold in July, marking its largest monthly addition since October 2023 and extending its buying streak to 21 consecutive months. China is not alone. Poland has remained an active buyer, Tanzania continues to accumulate reserves, and South Korea recently announced plans to begin purchasing domestically refined gold for the first time since 1967. The latest World Gold Council central bank survey also highlights the strength of official sector demand. Of the 74 central banks surveyed, 45% indicated they expect to increase gold's share of reserves over the next 12 months, the highest proportion since the survey began in 2018. The outlook The combination of improving positioning, supportive flow dynamics, lower real yields, a steeper yield curve, easing Fed expectations and persistent central bank buying has helped propel gold back towards US$4,400. The question now is whether the market has sufficient momentum to push through US$4,500 and ultimately challenge the highs seen during April and May near US$4,800. No one knows whether that will happen. However, when technical breakouts align with supportive macro fundamentals and powerful flow dynamics, trends can often extend much further than many expect. Gold has firmly moved back into that conversation. Time to back up the truck, gold got game... #gold #gld #silver