The US ISM Services report was particularly strong, both overall and relative to expectations
With nearly all activity and price subcomponents rising robustly (employment being the lone exception). Notably, overall business activity expanded to a six-month high, new orders climbed to their highest level in over three years, and prices paid reached a four-year peak. Source: Bloomberg, Mo El Erian
Nobody saw this one coming.
Wall Street expected just 55,000 new jobs in August, but the US economy added 162,000, nearly three times consensus, while July and June were also revised higher by a combined 55,000. Unemployment remained at 4.1% and the participation rate rose to 61.6%, with job creation broadening beyond healthcare to hospitality, education, construction and manufacturing. With the 2026 monthly average now around 80,000 jobs versus only 10,000 in 2025, the report suggests a much more resilient labour market than recent weakness narratives implied. For markets, however, stronger employment could weaken the case for Fed rate cuts, potentially putting upward pressure on yields and the dollar while weighing on stocks, crypto and gold. Source: BLS
3rd September could be a major test for the U.S. Treasury market.
At 1:40 p.m. ET, the Treasury is scheduled to buy back up to $12.5 billion of its own debt. The market reaction will matter: If yields fall, the operation may be helping absorb some of the enormous supply hitting the market. If yields continue rising, the message could be more concerning: $12.5 billion may simply be too small relative to the amount of debt investors must absorb. This buyback is not just another Treasury operation. It is a live test of whether buybacks can meaningfully relieve pressure in the world’s most important bond market. Set your calendar: 1:40 p.m. ET. Source: Nic
In the US, SPR (Strategic Petroleum Reserve) is at the lowest since 1982
Crude -4.450MM, Exp. +60K Gasoline -1.173MM Distillates +796K Cushing +80K Production 19kb/d SPR down 3.1MM barrels to 287 million, just 17 million away - or one month of drain - from record low.
Less than 5% of S&P 500 stocks yield more than the 10-year Treasury yield, the fewest since May 2007.
Source: Rob Anderson
When was the last time any Fed chairman raised rates with $8T in USTs (over 25% of US GDP) maturing in <1 year?
Source: Luke Gromen
US efforts to contain the rise in long -term yields face two major obstacles
(i) once you draw a line in the sand, markets will test you; (ii) global long-term yields are rising, which inexorably drags up US long-term yields no matter what the US does... Source: Robin Brooks
U.S. corporate net interest payments have plunged to the lowest in decades
Source. Bloomberg, Hedgeye
