Stocks experienced their largest monthly gain after Federal Reserve Governor Christopher Waller suggested he would back holding interest rates steady if inflation continued to show signs of easing. This led money markets to reduce their expectations for a September rate hike, with the likelihood dropping to roughly 50% from about 70% earlier in the week. Waller emphasized that his next rate decision would be heavily influenced by August inflation data, due next week, but offered optimism regarding recent price pressure improvements.
Following these comments, major US stock indexes saw significant gains: the S&P 500 rose 1.1%, the Nasdaq 100 increased by 1.2%, and the Dow Jones Industrial Average also climbed 1.2%. The MSCI World Index rose 1.2%. The dollar fell to its lowest level since May, with the Bloomberg Dollar Spot Index dropping 0.5%. The euro gained 0.4% to $1.1630, and the British pound rose 0.3% to $1.3529.
The Japanese yen surged 1.9% to 155.74 per dollar, reaching its biggest two-day rally since early August, as traders increased bets on Japanese rate hikes and remained vigilant for potential intervention. Bitcoin soared 5.4% to $81,578.26, while Ether rose 5.1% to $2,514.7. In the commodities market, West Texas Intermediate crude increased 0.8% to $91.72 a barrel, and spot gold jumped 2.1% to $4,472.79 an ounce.
Bond yields eased across the board. The yield on 10-year Treasuries was largely unchanged at 4.77%, while the 2-year Treasury yield declined three basis points to 4.34%. Germany's 10-year yield fell three basis points to 3.34%, and Britain's 10-year yield dropped 10 basis points to 5.13%. Economists anticipate Friday's jobs report to show a 55,000 rise in payrolls for August, with the unemployment rate holding steady at 4.1%, supporting the view of a stable job market.
