EU Close Digest - 03 Sep 2026

Fed Governor Waller signals potential pause in rate hikes if August inflation data cools.

US Session Open & European Close

The US market opened with a positive tone, as the S&P 500 index rose 1.00% to 7,743, and the Nasdaq 100 gained 1.16% to 29,482. The European markets had a mixed close, with the Euro Stoxx up 0.24% to 6,377, while the Nikkei 225 fell 2.85% to 64,326. The US 2-year yield increased 1.0 basis point to 4.20%, and the US 10-year yield decreased 4.8 basis points to 4.75%. The VIX index fell 1.97% to 14.90%. The US dollar index (DXY) dropped 0.58% to 98.98, while the EUR/USD pair rose 0.26% to 1.1625.

Analyst Consensus

• US Monetary Policy: Both Bloomberg and InvestingLive flag Fed Governor Waller's comments on the potential pause in rate hikes if August inflation data cools. Waller's statement suggests that the Fed is willing to wait for more data before tightening further, which could lead to a decrease in interest rates and an increase in stock prices. This implies that investors should closely watch the upcoming inflation data, as softer numbers could extend market relief and hotter data could reignite hike fears. According to Bloomberg, the market is now pricing in a 60% chance of a rate hike, down from 67% yesterday.
• Global Economic Trends: The BIS and Bond Vigilantes argue that the current economic regime, characterized by low interest rates and abundant liquidity, may be coming to an end. This shift could impact asset prices and require a reevaluation of investment strategies. The BIS notes that the global house price decline could indicate a cooling housing market, potentially affecting related financial instruments and economic indicators. In contrast, Bond Vigilantes suggest that Argentina's shock therapy under Milei has sharply reduced inflation and restored policy credibility, attracting investor interest and lowering financing costs.
• Cross-Asset Linkage: The correlation between gold prices and inflation expectations is a key theme, with Bloomberg noting that gold prices have risen due to a weakening dollar and yen-intervention fears. The current gold price is US$ 4,554, up 4.30% from the previous close. This implies that investors should monitor gold prices and inflation expectations, as they could impact the overall direction of monetary policy and asset prices.
• Geopolitical Risks: The escalating US-Israel-Iran conflict has turned crude oil into a high-beta, war-fueled market, according to Bloomberg. This geopolitical risk could lead to increased volatility in oil prices and potentially impact the global economy. The current Brent oil price is 96.99, up 1.42% from the previous close.
• Market Sentiment: The Polymarket signals suggest that the market is pricing in a low probability of a Republican Party candidate winning the 2026 WA-10 House election, with a 87% chance of a Democratic Party candidate winning. This implies that investors should monitor political developments and their potential impact on market sentiment and asset prices.

Tomorrow's Setup

The overnight outlook for Asia is uncertain, with the Japanese yen surging higher for the second straight day. Tomorrow's macro data releases include the US federal government's stake in The Boeing Company, with a consensus estimate of no stake being taken. The current positioning read suggests that investors are cautious, with a focus on the upcoming inflation data and its potential impact on monetary policy. The key levels to watch at the open include the US 10-year yield, currently at 4.75%, and the S&P 500 index, currently at 7,743. The one open question the market is most focused on heading into tomorrow is whether the August inflation data will cool, potentially leading to a pause in rate hikes.