US Treasury yields are erasing a significant portion of the gains recorded following the speech by Federal Reserve Chair Kevin Warsh in Jackson Hole. The 2-year yields are falling most sharply (down 0.9%, or 4 bps), with smaller movements seen in 10-year (-0.6%, or 2.5 bps) and 30-year (-0.5%, or 2 bps) bonds.
Monetary Policy
The focus today has been on the speech by FOMC member Christopher Waller and the publication of ADP data from the US labour market.
Waller presented a significantly more dovish stance than Warsh today. Unlike the Fed Chair, he was able to outline specific factors he will monitor when making the September decision.
- He stated that the disinflation process is continuing and that core inflation looks fundamentally better than the main indicators suggest.
- He noted that if the upcoming CPI inflation reading (scheduled for 11 September) does not present a negative surprise, he will most likely support maintaining interest rates at an unchanged level at the next meeting.
This led to a dovish repricing, i.e. a decline in the market-implied probability of a rate hike in September. It is currently near 50% (compared to over 60% yesterday).
Figure 1: Change in Market-Implied Probability of Interest Rate Hikes at Individual Federal Reserve Meetings (2026–2027)
Source: XTB Research, 03.09.2026
Macroeconomic Data
The shuffling was also influenced by weak ADP data, which served as a preview of tomorrow's NFP report. The number of new jobs fell for the third time in a row, reaching its lowest level since January.
- The situation was particularly poor in the manufacturing sector, where 17,000 jobs were lost. The situation was similar in the professional and business services sector (-16,000).
- The education and healthcare sector fared significantly better (+45,000).
Currency Market
This did not provide a favourable environment for the dollar, which is weakening today against all other G10 currencies. The appreciation of the yen, which is returning to favour with investors due to increasingly hawkish rhetoric from BoJ policymakers, also appears unfavourable for the dollar.
Figure 2: G10 Currency Performance [vs. USD] (03.09.2026)
Source: XTB Research, 03.09.2026
We are paying particular attention to the messages from Hajime Takata, who noted that the bank should be more aggressive than the market expects, pointing to the need for dynamic interest rate hikes to suppress gathering inflationary pressure.
Equity Market
Figure 3: Dashboard for S&P 500 (03.09.2026)
Source: XTB Research, 03.09.2026
The improvement in sentiment, largely a consequence of the decline in yields, was not concentrated in a single sector today; technology, communication, and financial companies all performed well. The commodities sector stood out positively.
All companies from the traditional Mag7 gained. Particularly large gains were recorded by Tesla (+7.2%), Meta (+3.7%), Microsoft (+2.9%), and Nvidia (+2.5%).
Today's rise in Tesla's share price appears directly linked to the premiere of the Cybercab model, a fully autonomous, two-seater taxi. The market is reacting enthusiastically to the vision of Tesla launching its own network of cheap, unmanned vehicles.
Figure 4: Heatmap for Nasdaq 100 (03.09.2026)
Source: XTB Research, 03.09.2026
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