Bleak Jobs Report Sparks Recession Fears; U.S. Stocks Reverse Gains, Gold Hits Fresh Record

Market Overview

Last Friday, a dismal U.S. nonfarm payrolls report reignited concerns over a looming recession while significantly boosting expectations for Federal Reserve rate cuts. Investors are now betting on three rate cuts by the Fed within this year.

Market sentiment was highly volatile. The three major U.S. equity indexes initially surged at the open under the logic of “bad news is good news,” briefly touching fresh record highs. However, deeper recession worries quickly outweighed optimism over rate cuts, causing stocks to reverse course. The Nasdaq retreated more than 1.5% from its intraday high.

Rate-cut bets combined with a flight to safety sent U.S. Treasury prices sharply higher, pushing yields lower across the curve. The 10-year Treasury yield tumbled more than 8 basis points, while the 2-year yield fell to its lowest level since 2022. The U.S. Dollar Index also slumped.

Commodities diverged sharply: gold, a safe-haven asset, soared 1.16% to a fresh record of $3,600 per ounce. In contrast, oil—closely tied to the economic outlook—plunged 2% to a three-month low amid mounting recession fears.

Hot Topics Ahead

OPEC+ Poised to Boost Output in October

OPEC+ has “in principle agreed” to raise production in October, signaling a strategic pivot toward reclaiming market share rather than defending prices. According to member state representatives, the Saudi- and Russia-led alliance is expected to approve a 137,000-barrels-per-day increase during its Sunday virtual meeting, marking the start of unwinding the next round of output cuts.

Key members noted that October‘s move will begin restoring 1.66 million barrels per day of previously reduced output, cuts that were originally scheduled to last until the end of 2026. This decision extends OPEC+’s recent sharp policy shift—bringing forward by one year the restoration of 2.2 million barrels per day in supply to capture market share.

Political Turmoil in Japan Over the Weekend

Shigeru Ishiba announced his resignation at a press conference, stating that his mission was complete and, with the U.S.-Japan trade agreement secured, it was the appropriate time to step down. He stressed he had no personal attachment to the position. Analysts view Ishibas decision to resign ahead of the crucial September 8 vote as a strategic move. Waiting for a vote to force his exit would have amounted to a public vote of no confidence.

Key Focus (GMT+8)

23:00 – U.S. New York Fed 1-Year Inflation Expectations (August)