Closing Recap

U.S. stock futures indicate a mixed and cautious open as investors return from the weekend, digesting last week’s shockingly weak jobs report and political upheaval in Japan; gold is easing from record highs, oil is up on geopolitical risk, and the dollar is defensive ahead of key inflation data this week. Currency markets saw a volatile open with the Japanese Yen weakening sharply on the Prime Minister’s resignation, while the U.S. dollar remained defensive on Fed rate cut hopes.

Key Takeaways 

• Futures Mixed After Weak Jobs Report: Equities are poised for a cautious start after Friday’s dismal August Nonfarm Payrolls report (+22K vs. 75K est.) fueled economic concerns but also boosted Fed rate cut hopes. 
• Japan Political Uncertainty Drives Markets: The resignation of Japanese Prime Minister Shigeru Ishiba over the weekend has created political uncertainty, initially strengthening the Yen before the move faded. Japanese stocks surged.
•  Focus on U.S. Inflation Data: With a September Fed rate cut now almost fully priced in (>90% odds), the market’s main focus this week will be on U.S. consumer and producer inflation reports. 
• Gold Eases from All-Time Highs: Gold is pulling back slightly after hitting a new record high above $3,600/oz on Friday, driven by dovish Fed bets. 
• Oil Gains on Geopolitical Tensions: Crude oil prices are higher as markets monitor the ongoing Russia-Ukraine conflict and a modest OPEC+ output hike plan. 
• Dollar Defensive: The U.S. dollar is attempting to stabilize after Friday’s sharp decline, with the DXY holding above 97.8. 
• Global Markets Mixed: Asian markets were mostly higher, led by a strong rally in Japan, while European markets are consolidating. 
• Seasonal Headwinds a Concern: Markets are entering September, which has historically been the worst month of the year for U.S. stocks. 

Market Overview

U.S. equity markets are set to begin the week on a mixed and cautious note, as investors grapple with the fallout from last Friday’s shockingly weak U.S. jobs report and a weekend of significant political developments in Japan. The August Nonfarm Payrolls report showed a mere 22,000 jobs were added, far below expectations and reinforcing concerns about a rapidly cooling U.S. labor market. This has cemented market expectations for a Federal Reserve interest rate cut at its meeting next week, with the CME FedWatch tool indicating a 90% chance of a 25-basis-point reduction. 

Index	Up/Down	% Change	Last
DJ Industrials	-220.43	-0.0048	45400.86
S&P 500	-20.58	-0.0032	6481.5
Nasdaq	-7.31	-0.0003	21700.39
DAX (Germany)	-125.66	-0.0052	23911.67
FTSE 100 (UK)	-25.19	-0.0027	9171.15

Over the weekend, Japanese Prime Minister Shigeru Ishiba announced his resignation following a recent election setback, creating a period of political uncertainty for the world’s fourth-largest economy. The news initially sent the Japanese Yen gapping lower (USD/JPY higher) but overshadowed positive revisions to Japan’s Q2 GDP data. Japanese stocks, however, surged on the news, with the Nikkei 225 climbing over 1.4%. Elsewhere in Asia, markets were mostly higher, shrugging off a weak finish on Wall Street on Friday. 

With the Fed’s dovish pivot now the market’s base case, the focus this week shifts squarely to key U.S. inflation data (CPI and PPI). These reports will be critical in determining the urgency and potential magnitude of future Fed easing. In the commodity space, gold is holding firm near its recent all-time high, supported by the dovish Fed outlook. Oil prices are climbing on the back of new sanctions threats against Russian crude and a modest OPEC+ production hike.

Economic Calendar

The U.S. economic calendar is very light today, with the focus remaining on Friday’s jobs report fallout and upcoming inflation data. Today’s Major U.S. Releases: 

• 7:00 PM GMT / 3:00 PM ET: Consumer Credit m/m 

Key This Week: 

• U.S. Consumer Price Index (CPI) for August. 
• U.S. Producer Price Index (PPI) for August. 
• FOMC Meeting (Next Week, Sept 16-17). 

Major International Data (Released Today): 

• Japan Q2 GDP (Revised): +0.5% q/q (vs. +0.4% prelim), +2.2% annualized (vs. +1.8% prelim). 

Commodities, Currencies, and Treasuries

Gold prices are easing slightly from the record highs hit on Friday, with spot gold trading down around -0.79% at $3,624.42 per ounce. The pullback appears to be minor profit-taking after a powerful rally driven by the soft U.S. jobs data. Crude oil prices are trading higher, with WTI up 1.22% to $62.62/bbl and Brent up 1.21% to $66.29/bbl, supported by ongoing geopolitical tensions in Ukraine. 

Asset	Up/Down	Unit / % Change	Last
WTI Crude	0.76	USD/bbl	62.97
Brent	0.72	USD/bbl	66.559
Gold	-28.5	USD/oz	3624.42
Silver	-0.35	USD/oz	41.203
EUR/USD	0.001	USD	~1.1728
USD/JPY	0.21	JPY	~147.61
10-Year Note	-0.01	%	0.04086
Dollar Index	-0.06	Points	~97.71

The U.S. Dollar Index (DXY) is attempting to stabilize, holding above 97.8, after Friday’s sharp decline. The Euro is consolidating around 1.1700, while the Japanese Yen weakened significantly (USD/JPY up) on news of the Prime Minister’s resignation. U.S. Treasury yields are slightly lower, with the 10-year yield at 4.096%, reflecting the market’s dovish Fed expectations.

Looking Ahead 

The market will be primarily driven by anticipation of this week’s key U.S. inflation reports (CPI and PPI). The data will be critical in confirming or challenging the market’s high conviction in a September Fed rate cut. Political developments in Japan and their impact on the Yen and Bank of Japan policy will also be closely watched. With a light U.S. data calendar today, trading may be subdued as investors digest last week’s news and position themselves for the upcoming inflation data. The historical tendency for September to be a weak month for stocks also looms in the background.