Closing Recap

U.S. stocks surged in a powerful “buy the dip” rally, pushing major averages near all-time highs as last week’s credit and trade fears faded; technology and small caps led the advance, gold soared to another record, oil was flat, and Treasury yields held steady. In the currency markets, the U.S. dollar was firm as hopes for an end to the government shutdown provided support, with the Japanese Yen weakening after a new pro-stimulus Prime Minister was confirmed, while the Euro was pressured by French political turmoil and the British Pound slipped on easing trade tensions. Bitcoin pulled back on trade concerns. 

Key Takeaways 

• Stocks Rally Broadly: Equities posted strong gains (S&P +1.1%, Nasdaq +1.4%, Russell 2000 +1.9%), with investors once again buying the dip after a brief pullback last week. 
• “Buy the Dip” Mentality Persists: The market’s resilience was on full display as investors shrugged off last week’s regional bank credit concerns and U.S.-China trade tensions. 
• Gold Surges to New All-time High: Gold prices climbed over 3% to settle at a new record of $4,359.40 per ounce, driven by safe-haven demand from the ongoing government shutdown and dovish Fed expectations. 
• Fed Blackout Period Begins: The Federal Reserve has entered its “blackout period” ahead of next week’s FOMC meeting, where a 25-basis-point rate cut is widely expected. 
• Yen Weakens as Takaichi Confirmed as PM: The Japanese Yen has weakened after Sanae Takaichi was officially elected Prime Minister, solidifying expectations for a pro-stimulus, “Abenomics 2.0” agenda that pushes back Bank of Japan rate hike expectations.
• Dollar firm 3rd consecutive day: The U.S. dollar firmed, with the Japanese Yen weakening as USD/JPY climbed to 151.4 after a pro-stimulus Prime Minister was confirmed in Japan, while the Euro was pressured by French political turmoil and the British Pound eased on softer trade rhetoric. 
• Bitcoin Pressured: Bitcoin prices fell below $108,000 as traders assessed lingering macroeconomic risks and the impact of the U.S.-China trade tensions on the crypto market. 
• Oil & Yields Flat: Crude oil prices were little changed, and Treasury yields held steady in a quiet session for both markets. 
• Focus on Earnings: The market now looks ahead to a busy week of Q3 earnings reports, including from major tech names like Tesla, Netflix, and IBM. 

Market Overview

After a brutal end to last week, Wall Street was treated to a classic “buy the dip” moment on Monday. U.S. equity markets opened strong and pushed higher throughout the session, with investors decisively brushing aside last week’s brief concerns over regional bank credit quality and U.S.-China trade tensions. The “buy the dip” mentality, a hallmark of the market’s powerful rally since April, returned with force, sending major averages knocking on the door of fresh record highs. The small-cap Russell 2000 was a notable outperformer, and technology stocks once again led the charge, with Apple (AAPL) hitting a new all-time high. 

Index	Up/Down	% Change	Last
DJ Industrials	515.97	0.0112	46706
S&P 500	71.12	0.0107	6735
Nasdaq	310.57	0.0137	22990
Russell 2000	47.73	0.0195	2499

The positive sentiment was supported by several factors. The CBOE Volatility Index (VIX), which had spiked above 28 last week, has since plunged back below 19, signaling a significant easing of fear. Hopes for an end to the U.S. government shutdown, now in its 20th day, also provided a tailwind. The main focus for investors, however, is the upcoming Federal Reserve policy meeting, where a 25-basis-point rate cut is widely anticipated, and the start of a heavy earnings week, which will provide crucial insights into corporate health. 

In major international news, Japan’s lower house elected Sanae Takaichi to become the country’s next Prime Minister. As a known fiscal dove who supports “Abenomics”-style policies, her confirmation has sent the Japanese Yen lower on expectations that the Bank of Japan will delay any rate hikes. European markets are opening with a cautious tone as traders await a key speech from ECB President Lagarde.

Economic Calendar

With the U.S. government shutdown ongoing, there were no major U.S. data releases on Monday. The market continues to operate in a data vacuum, driven by political headlines and central bank commentary. The U.S. economic calendar is light today. The main highlight is the Canadian CPI report. 

• Canadian CPI (Aug): CPI Y/Y 2.3% (vs. 1.9% prior), CPI Trimmed Mean Y/Y 3.0% (in line). 
• ECB President Lagarde Speaks (07:00 GMT).

Key risk events this week: 

• Q3 Earnings Season Continues: Reports from Tesla, Netflix, IBM, TXN. 
• U.S. Government Shutdown ongoing. 

Commodities, Treasuries and Currencies 

The flight to quality and liquidity is breathtaking in the precious metals space. Gold prices soared to another new all-time high, with the December futures contract gaining a massive $146.10 (+3.35%) to settle at a record $4,359.40 per ounce. The rally was driven by strong safe-haven demand from the U.S. government shutdown and high expectations of a dovish Fed. Societe Generale notes the market is in a “buy shiny stuff” mode, driven by global fiat debasement concerns, and has a year-end 2026 target of $5,000. Silver also exploded to a multi-decade high above $52. Crude oil prices were little changed, with WTI settling down $0.02 on the day. Natural gas, however, surged nearly 13% in a massive one-day jump. 

Asset	Up/Down	Unit / % Change	Last
WTI Crude	-0.02	USD/bbl	57.52
Brent	-0.28	USD/bbl	61.01
Gold	146.1	USD/oz	4359.4
EUR/USD	-0.0008	USD	1.1643
USD/JPY	0.13	JPY	150.75
10-Year Note	-0.022	%	0.03986

In the currency markets, the Japanese Yen was the main story, weakening significantly after Sanae Takaichi was confirmed as the next Prime Minister, sending USD/JPY up 0.4% to 151.4. The U.S. Dollar Index (DXY) was firm, with the EUR/USD pair weakening to near 1.1630 and the GBP/USD pair slipping below 1.3400:

• USD/JPY: The pair has climbed back above 151.00 after Sanae Takaichi was officially confirmed as Japan’s next Prime Minister. This reinforces the “Abenomics 2.0” narrative of fiscal stimulus and delayed BoJ tightening, which is fundamentally bearish for the Yen. 
• EUR/USD: The pair is extending its decline, trading near 1.1630. The Euro is being weighed down by the prospect of a dovish ECB, with President Lagarde speaking later today. The price is currently battling with its 200-hour moving average at 1.1625, with a significant $1.2B options expiry at the 1.1600 level providing a key support level to watch. 
• GBP/USD: Sterling has weakened below 1.3400, pressured by the broad strength of the U.S. Dollar. Traders are now looking ahead to tomorrow’s UK CPI inflation report for the next major catalyst.

U.S. Treasury yields were little changed, with the 10-year yield holding steady around 3.986%, as the bond market remained in a holding pattern. Bitcoin fell -2.6% to below $108,000 as traders assessed lingering macroeconomic risks.

Looking Ahead 

The market will be keenly focused on Q3 earnings reports this week, particularly from major tech names like Tesla and Netflix. Any guidance from these companies on the impact of trade tensions and the economic outlook will be critical. The primary macro focus remains on the U.S. government shutdown and any progress toward a resolution. With the Fed in its “blackout period,” the market will be trading on sentiment and corporate news until next week’s FOMC meeting. The Canadian CPI report today will be a key data point for the North American session. What to watch: 

• The “Trump Trade” Reversal: The entire market is currently trading on the hope that Trump will walk back his tariff threats.
• Canadian CPI Impact: Today’s Canadian inflation report is the main data event. With the market pricing in a high probability of a Bank of Canada rate cut this month, a surprisingly hot inflation number could trigger a significant hawkish repricing and a rally in the Canadian Dollar. 
• The Gold & Silver Mania: The move in precious metals is becoming parabolic. While the trend is undeniably strong, the rallies are extremely extended, and traders should be wary of sharp, sudden pullbacks on any unexpected shift in sentiment. 
• Earnings Take Center Stage: The focus is now shifting to earnings. Big tech names like Tesla, Netflix, and IBM are on deck this week. Their results and forward guidance will be crucial in determining if the market’s bullish momentum can be sustained.