Nonfarm Payrolls Fuel Fed Hiking Expectations, Yen Shifts to Rate Hike Logic

Huo Xing Finance reports: On September 5, this week’s global market dynamics centered on expectations for Fed policy, a stronger yen, geopolitical tensions, and global bond sell-offs. U.S. non-farm payrolls for August added 162,000 jobs, far exceeding the forecast of 56,000, prompting markets to reprice bets on a September Fed rate hike, with traders once again pricing in over a 60% probability of a September increase. Meanwhile, Trump continued publicly pressuring the Fed to cut rates, further highlighting internal divisions between hawkish and dovish voices within the Fed. The yen emerged as another major focus this week. The USD/JPY pair briefly neared 160 before rapidly retracing to around 155. Markets initially speculated that the Japanese government might intervene in currency markets again, but no conclusive evidence has emerged. In contrast, expectations for a Bank of Japan rate hike have clearly intensified, with Governor Ueda stating that the September meeting would discuss whether to raise rates. Markets are gradually shifting from “intervention trades” to “rate hike trades.” The U.S.-Iran conflict escalated further this week, with the U.S. launching a new strike against Iran, while Iran repeatedly targeted U.S. military assets in Jordan, Bahrain, Erbil in Iraq, Kuwait, and the UAE. Risks of supply disruptions in the Strait of Hormuz have re-entered market pricing. WTI crude briefly surpassed $90 per barrel, while Brent crude rose above $95. Global bond sell-offs continued to spread: Japan’s 10-year government bond yield climbed above 3%, hitting its highest level since 1996; yields on long-dated U.S., U.K., and European bonds also rose in tandem, as investors began reassessing the global interest rate floor. Meanwhile, Indonesia’s largest nickel industrial park faces potential production cuts of 30% to 40% due to water shortages caused by El Niño. In technology, on the day GPT-6 Astra was released, AI services from OpenAI, Anthropic, and xAI experienced outages simultaneously, reigniting concerns about the stability of AI infrastructure. Tesla officially launched its Cybercab autonomous ride-hailing service in Austin, further advancing the commercialization of robotaxis. In U.S. equities, the market experienced a “rate shock—bounce-back—pressure from strong NFP” pattern this week: the S&P 500 rose 0.09%, the Nasdaq gained 0.4%, and the Dow fell 0.27%. Gold declined 0.52% for the week, closing at $4,431 per ounce; the U.S. Dollar Index fell 0.53%, closing at 99.16.