Overnight, while the US slept

Equities closed firm, but the real action was in bonds. US stocks finished Thursday higher — S&P 500 7,673.04 (+0.42%), Dow 53,195.36 (+0.83%), Nasdaq 26,168.46 (+0.39%) — with chip and AI names still carrying the index after Nvidia's guidance earlier in the week. Nothing about that close tells you much. What mattered was the quiet bid in Treasuries from midday New York onward.

Rates & DXY: The 10-year eased to roughly 4.645%, the 2-year sits near 4.17%, and the 30-year is still up at about 5.161%. So the curve is doing two different things at once: 2s10s (the gap between 2-year and 10-year yields — a rough gauge of how much growth and inflation the market expects down the road) is only about +48bp, but the 5s30s end is steep and getting steeper. That shape is the market saying short-term policy might not go much higher, but we want paying for holding the long end. The dollar index (DXY — the greenback measured against a basket of six major currencies) is around 99.17, and notably it gave back most of its post-inflation pop through the New York afternoon. Markets are still pricing roughly a 36% chance the Fed hikes in September.

The dominant driver — energy, not inflation. Iran's military confirmed a revenue-sharing agreement with Oman over the Strait of Hormuz, and Brent has fallen more than 7% on the week to somewhere around $87. Apply the framework properly here. Since February this has been a classic supply-side shock — a war disrupting the flow of oil, pushing headline inflation up and forcing the central bank to lean hawkish, which lifts real rates (interest rates after subtracting inflation, and the thing gold actually competes against) and props up the dollar. That chain was bearish gold. What's happening now is that chain running in reverse. The supply disruption is being priced out. If the energy impulse fades, the case for a September hike gets much harder to make, real rates fall, and gold's biggest headwind disappears.

The counterweight is that July PCE printed 0.2% m/m and 3.7% y/y, both above forecast, and that number is what the hawks will quote. But it's a July number describing a world where Brent was near $95. I think it's already out of date, and I suspect the bond market thinks so too — that's what the easing yields were telling you.

The re-escalation risk is real and I'm not dismissing it: a US source told Al Jazeera overnight that any Iran–Oman agreement is "of no importance" to Washington, Iran's top security official warned of strikes on US interests, and there are reports of a critical Patriot missile shortage in Europe tied to the conflict. If the deal unravels, oil gaps back up and this whole read inverts.

Gold: last traded 4,601.68 / 4,601.88, with the market in its brief daily break and reopening shortly after 8am Sydney. Thursday's range was 4,564.87–4,643.09; Wednesday's was 4,583.09–4,673.75. The shape of Thursday matters more than the level: gold got sold down to 4,564.87 on the inflation hangover, then V-bottomed and recovered nearly $50 as yields eased — the low printed in the exact hour the bond bid arrived. RSI (a 0–100 momentum gauge where above 70 is stretched and below 30 is washed out) sits at 47.7 on the 15-minute chart. Neutral. Coiled.

Crypto: Bitcoin 80,079.80 (15-min RSI 49.9, ATR — average true range, a plain measure of how much an asset typically moves — around $201); today's range 79,986.53–80,172.53, prior-day 78,279.63–80,828.43. It ran above $81,000 earlier in the week on Treasury buybacks and a short squeeze, flushed to $78,279, and has spent two sessions rebuilding above $80,000. That it's holding the big figure after that flush is the constructive part. Ether 2,502.55 (RSI 45.3, ATR $7.80); today 2,499.09–2,508.34, prior-day 2,471.39–2,564.49. Ether had the messier session — down to 2,471 then back to 2,502 — but the regulatory re-rating that drove August is intact.

Key FX:

• EURUSD 1.16546 — RSI 61.2 (mildly bid), ATR 2.2 pips. Today 1.16455/1.16544, prior-day 1.16365/1.16599. The euro was down at $1.1639 during Europe and has quietly clawed it all back.
• GBPUSD 1.35963 — RSI 58.6, ATR 3.7 pips. Today 1.35829/1.35961, prior-day 1.35707/1.36026. Sterling is pressing right up against Thursday's high after four strong weeks; rate-hike bets for the Bank of England this year have been pared back.
• USDJPY 159.391 — RSI 49.8, ATR 3.1 pips. Today 159.357/159.449, prior-day 159.116/159.526. Capped repeatedly in the 159.45–159.53 zone. The Bank of Japan has been sounding more hawkish and Tokyo CPI lands this morning.
• AUDUSD 0.71952 — RSI 52.8, ATR 2.2 pips. Today 0.71878/0.71957, prior-day 0.71624/0.71980. Grinding higher on the softer dollar.
• NZDUSD 0.59527 — RSI 56.3, ATR 2.4 pips. Prior-day range just 20 pips. Almost nothing to trade here.
• USDCHF 0.80400 — RSI 41.7, ATR 2.8 pips. Today 0.80288/0.80412, prior-day 0.80296/0.80615. The franc was the cleanest expression of Thursday's dollar fade.
• USDCAD 1.38555 — RSI 41.5. Prior-day 1.38522/1.38914. This one is the puzzle: oil is down 7% on the week, which should hurt the loonie, and yet the pair fell all day. The dollar leg beat the commodity leg.

Cross-asset snapshot:

Asset	Now	vs Prior Close	Vector
S&P 500	7,673.04	+0.42%	Risk-on
US 10Y	~4.645%	Easing	Mildly dovish
US 30Y	~5.161%	Elevated	Term premium intact
DXY	~99.17	Gave back its pop	USD softening
Gold	4,601.78	+36.9 off the 4,564.87 low	Constructive, event-gated
Bitcoin	80,079.80	−749 from the 80,828 high	Holding the big figure
Brent	~$87	−7% on the week	Supply shock unwinding

Context: it's the last business day of August, so expect month-end rebalancing flows through the London fix, and Asian-session ranges are unusually compressed ahead of tonight's event.

---