Dollar and Treasury Yields Strengthen, Gold and Cryptocurrencies Decline

Market Overview

Ahead of Federal Reserve Chair Jerome Powells highly anticipated speech at Jackson Hole, investor sentiment turned cautious, with safe-haven demand picking up. U.S. equities ended lower across the board for the first time this week. The S&P 500 posted its fifth consecutive loss, while the Nasdaq also closed at a two-week low. Walmart fell 4.5% after reporting weaker-than-expected profits, leading declines among Dow components.

Stronger-than-expected PMI data and hawkish remarks from Fed officials further dampened expectations of a September rate cut. Treasury prices retreated, pushing the policy-sensitive two-year yield to a near three-week high. The U.S. dollar index extended its rebound, climbing to its highest level in over a week.

In the cryptocurrency market, prices broadly pulled back, with Bitcoin briefly testing the $112,000 level. Commodities showed a mixed performance: gold came under pressure, hitting a near three-week intraday low, while oil surged more than 1% for a second straight session, closing at a two-week high.

Key Themes to Watch

Walmart Misses Profit Estimates for the First Time in Three Years

Walmarts Q2 revenue topped forecasts, supported by robust e-commerce growth, prompting the company to raise its full-year sales and earnings guidance. However, rising costs driven by tariffs weighed heavily, causing profits to miss estimates for the first time in three years. Adjusted EPS came in at $0.68, below consensus of $0.74. Higher insurance claims, legal expenses, and restructuring costs were cited as the main drags.

Manufacturing PMI Surges Unexpectedly

S&P Global data showed U.S. manufacturing PMI expanded at the fastest pace in more than three years, fueled by stronger demand. The rebound in manufacturing also lifted the composite PMI, which includes services, to its highest level this year. However, this resurgence has added to inflationary pressures—firms are increasingly passing on higher tariff-related costs to customers as pricing power strengthens.

Focus Ahead

22:00 GMT+8 – Fed Chair Powell delivers keynote speech at the Jackson Hole Economic Policy Symposium.

Overnight 01:00 GMT+8 – U.S. Baker Hughes oil rig count (week ending Aug 22).