“Bad News Is Good News”: Treasuries and Gold Rally, Dollar Weakens, Oil Under Pressure

Market Overview

U.S. JOLTS job openings data came in weaker than expected yesterday, reinforcing market expectations of a Federal Reserve rate cut. This fueled a classic “bad news is good news” rally, with both risk assets and safe-haven assets surging simultaneously.

In equities, mega-cap tech stocks led the gains: Alphabet extended its rally with a stunning 9% jump, while Apple rose 3.8%, pushing the Nasdaq up 1%. The Dow Jones reversed sharply higher into the close but still finished slightly lower, down 0.05%. Weak labor data drove U.S. Treasury yields lower across the curve, with the 10-year yield falling more than 4.2 basis points. The 30-year yield briefly touched 5% intraday before pulling back. The U.S. Dollar Index slid more than 0.6% from its daily high.

Precious metals stood out: gold posted its seventh straight gain, rallying over 1.2% intraday to another record high. Silver also extended its strength, breaking above $41 for the first time in 14 years. In contrast, crude oil tumbled more than 2.5% on reports that OPEC+ may consider another production hike at its upcoming weekend meeting.

Hot Topics Ahead

• Federal Reserve Beige Book

• The Fed‘s Beige Book released on Wednesday indicated little change in economic activity across most districts in recent weeks. Consumer spending was flat to lower as wages failed to keep pace with rising prices. Inflationary pressures varied: ten districts reported “modest to slight” inflation, while two noted “strong input cost growth.” Mentions of inflation remain near a four-year low, but references to “slowing” fell sharply compared with July.

• Eurozone August Final PMI

• The Eurozone composite PMI was revised down slightly by 0.1 point to 51.0, indicating only modest growth. Germany’s services PMI was unexpectedly revised lower to 49.3, underscoring weakness in the regions largest economy. Meanwhile, both input costs and output prices accelerated, signaling renewed inflation pressures.

Key Events to Watch (GMT+8)

• 19:30 U.S. Challenger Job Cuts (Aug, thousands)

• 20:15 U.S. ADP Employment Change (Aug, thousands)

• 20:30 U.S. Initial Jobless Claims (week ending Aug 30, thousands); U.S. Trade Balance (Jul, $ billions)

• 21:45 U.S. S&P Global Services PMI Final (Aug)

• 22:00 U.S. ISM Non-Manufacturing PMI (Aug); U.S. Senate Banking Committee hearing on Fed Governor nominee Adriana Kugler

• 23:30 FOMC Permanent Voter, New York Fed President John Williams speaks at the Economic Club of New York

• Overnight 00:00 U.S. EIA Crude Oil Inventories (week ending Aug 29, million barrels)