Market drivers and catalysts

• Macro: A weak July payrolls print reset the Fed debate, inflation data now carries the week
• Equities: US and European equities ended at records after weak jobs data, while Asia traded mostly higher as rate fears eased.
• Volatility: Equity vol compressed into the payrolls relief while oil and gold vol stayed elevated
• Digital Assets: Exchange and treasury names led Friday's advance while spot drifted sideways overnight
• Commodities: Gold holds firm after best week since January; Oil rebound stalls
• Fixed Income: US yields lower after soft jobs data, but the move was choppy.
• Currencies: JPY weaker despite drop in global bond yields Friday. USD quiet after Friday’s sell-off.

Macro

• As reported Friday, US non-farm payrolls fell -23k in July versus +80k expected, and data for the previous two months were revised -103k lower, confirming other signs of a weakening labour market. The Unemployment Rate fell to 4.1% versus an unchanged reading of 4.2% expected, but this was seen as partly due to a 0.1% decline in the labour-force participation rate to a new post-pandemic low. Wage growth slowed to 3.2% YoY, reinforcing recent weakness in ISM services employment and ADP payrolls. Attention now turns to Wednesday’s CPI report after the jobs report knocked lowered rate hike expectations, and how markets respond to an expected drop in the core to the lowest y/y reading since March 2021
• Iran ruled out direct talks with the US, citing violations of the interim peace pact, while saying a deal with Oman on a shipping route through the Strait of Hormuz was “very close”. Tehran continues to demand an end to the US naval blockade, sanctions relief and compensation before fully reopening the Strait, while Trump said Washington would likely wait for mounting economic pressure to soften Iran’s stance.
• US Treasury Secretary Scott Bessent is signalling a desire to contain long-term yields after they surged to a 19-year high, with recent currency intervention and changes to Treasury’s bond-sale guidance possible reducing long-end supply suggesting growing concern about rising borrowing costs amid persistent inflation and nearly USD 2 trillion annual budget deficits.
• More in our Macro Analysis & Macroeconomic News

Macro calendar highlights (times in GMT)

• 0600 – Norway Jul. CPI
• 0130 (Tuesday) – Australia NAB Business survey
• 0430 (Tuesday) Australia RBA Cash Target Announcement

Earnings events

Earnings highlights for the rest of the week:

• Monday: Rocket Lab, AST SpaceMobile
• Tuesday: Sea Limited, Lumentum Holdings, Cardinal Health, Coreweave, Constellation Software, Super Micro Computer
• Wednesday: Cisco Systems, Tokio Marine, Coherent, Nebius Group
• Thursday: Applied Materials, Brookfield Corporation, Netease, Nu Holdings, RWE, AP Moller, Adyen, Orsted

For all macro, earnings, and dividend events check Saxo’s calendar.

Equities

• USA: The S&P 500 rose 0.6%, the Dow added 0.3%, and the Nasdaq 100 gained 1.2% on Friday, after July payrolls unexpectedly fell by 23,000 and reduced expectations of a September Federal Reserve rate increase. Atlassian surged 35.3% after beating quarterly expectations and guiding revenue above forecasts, Airbnb jumped 17.4% after a revenue beat, while Trade Desk sank 21.9% after guiding third-quarter revenue below expectations. Investors now turn to Wednesday’s July inflation report for the next major signal on rates.
• Europe: The STOXX 600 rose 0.3% to a record, while Germany’s DAX gained 0.7%, France’s CAC 40 added 0.2% and the FTSE 100 advanced 0.3%, as upbeat earnings and softer US jobs data extended the rally. Technology led the region, while Genmab climbed 6.5% after raising its full-year outlook and Kingspan surged 17.8% after lifting its profit forecast on strong data-centre demand, Munich Re fell 1.4% despite higher quarterly profit. Markets now watch renewed Strait of Hormuz uncertainty and this week’s US inflation data.
• Asia: Japan’s Nikkei traded 2.0% higher and South Korea’s KOSPI gained 0.6%, while China’s CSI 300 fell 0.7% as the region followed Friday’s Wall Street rally unevenly. Japanese and Korean technology shares led the rebound as the weak US jobs report reduced fears of an imminent Federal Reserve rate increase, while Chinese equities lagged after July consumer and producer inflation came in below forecasts, highlighting soft domestic demand. Higher oil prices limited some of the enthusiasm as investors continued to monitor uncertainty around the Strait of Hormuz.
• More in our Equity Trading - Stock Market Analysis & News

Volatility

VIX 14.90 | VIX FUTURES: 16.95 | TERM STRUCTURE: CONTANGO | SKEW: NORMAL (132.57) | MARKET REGIME: LOW-VOLATILITY BULL | AS OF ~06:00 CET

• After Friday's soft payrolls print, equity volatility compressed across the front end. Friday's cash close left VIX at 14.90, VIX1D down 9.5% to 11.36 and VIX9D down 5.5% to 11.96. VVIX firmed to 90.42, while three-month implied correlation rose 11.4% off a very low base.
• The cash curve sits in steep contango to VIX3M 18.72, with SKEW normal at 132.57 and MOVE down 5.4% to 72.03. Commodity vol remains the outlier: GVZ 25.64, OVX 55.80, still 3.7 times VIX. SPXW prices 40 points (0.52%) today and 91 points (1.17%) into Friday, with Wednesday's CPI the catalyst.
• For a more detailed view on volatility, check our Options Briefs in the Options Insights

Digital Assets

BITCOIN ~64,940 +0.14% | ETHEREUM ~1,917 +0.40% | IBIT 36.80 +0.85% | ETHA 14.47 +0.49% | AS OF ~05:55 CET

• Crypto equities carried Friday's session while spot has drifted sideways since. Softer US jobs data and the resulting retreat in rate-hike odds framed the move. Coinbase rose 5.6%, Circle 5.4% and Strategy 3.3%, and Iren added 8.7%, but pure miners diverged: Cipher fell 5.7%, Marathon 5.3% and CleanSpark 3.5%.
• US spot bitcoin ETFs took in roughly $1 billion last week, their strongest since April and third-best since October. The rebound followed a $116 million exploit of a hardware wallet, cited as a possible contributing factor.

Commodities

• The Bloomberg Commodity Index has started August slightly higher, with a rotation out of energy more than offset by renewed demand for metals, particularly precious metals following last week’s weak US jobs report and gold’s technical breakout. Agriculture is also contributing positively, led by strength across soft commodities, notably sugar and cocoa. Overall, the index, which tracks 25 major commodities, is up 23.4% year to date, outperforming the S&P 500 and trailing only the tech-heavy Nasdaq 100.
• Gold trades higher after surging 7.3% last week, its best weekly performance since January. The rally was supported by weaker US economic data reducing the risk of near-term rate hikes, mounting US fiscal debt concerns, a softer dollar and continued demand from central banks and Asian investors. After months of sideways trading, focus has shifted to whether gold can sustain its breakout. Support at USD 4,200 is key in our opionion, while a break above USD 4,383 may pave the way for a move towards the 200-day moving average near USD 4,500.
• Oil trades near unchanged, with traders showing limited appetite for another push higher as Iran and Oman remain short of a deal to reopen the Strait of Hormuz, while Houthi militants claimed an attack on a Saudi refinery near the Red Sea. The risk of renewed Middle East escalation remains elevated, but the muted price response highlights competing headwinds from weak Chinese demand and the release of emergency reserves.
• More in our Commodity News, Analysis & Commentary

Fixed Income

• US Treasuries first rallied in the wake of the weak US jobs report on Friday, but some of the reaction was erased later in the session. The front end of the US yield curve stuck more significantly lower as the market lowered the expectations of Fed policy tightening. The benchmark 2-year treasury yield fell about four basis points, ending the week at 4.205% after having dipped as low as 4.15% briefly after the release of the jobs report. The benchmark 10-year yield fell three basis points and is trading near 4.65% early Monday. The odds of a 25-basis point rate hike at the September 16 FOMC meeting fell below 50%.
• Japan’s government bond yields hit a new multi-decade high Monday after the Bank of Japan released its Summary of Opinions from the July 30-31 meeting, which said that inflation may pick up, and with one member saying that the pace of rate hikes may need to accelerate. The benchmark 2-year JGB yield nearly traded as high as 1.63% early Monday before rolling back below 1.62%, where it closed on Friday.

Currencies

• The JPY remained weak despite the drop in US yields on Friday and the BoJ Summary of Opinions sounding more hawkish and briefly driving Japan’s short-dated yields higher early Monday. USDJPY traded early Monday near 158.40 and up 0.4% from Friday’s close after the sharp dip below 157.00 on Friday in the knee-jerk reaction to the US jobs report. EURJPY traded at new highs for the week just below 183.00 by early Monday, up 0.3% from Friday’s close.
• The US dollar was largely directionless in early trading Monday after falling sharply on Friday in reaction to the soft US jobs data. EURUSD continued to consolidate from its Friday high of 1.1581, trading 1.1550 early Monday.
• The Australian dollar is trading sideways ahead of the RBA decision Tuesday, with the market looking for the bank to hold its fire on further rate increases for now after a soft CPI number for Q2.
• More on currencies in our dedicated section: Forex Trading News & Analysis