MARKET SNAPSHOT

U.S. stocks finished slightly lower while U.S. Treasury yields and the dollar climbed higher as investors reacted to Federal Reserve Chairman Kevin Warsh's Jackson Hole speech, which some economists and former Fed officials interpreted as hawkish. Oil prices continued lower on hopes for a deal to open a corridor through the Strait of Hormuz. Gold futures settled lower.

MARKET WRAPS EQUITIES

The Federal Reserve chairman surprised investors Friday by signaling greater concern about inflation than many had anticipated, prompting a sharp increase in short-term U.S. Treasury yields, a more modest rise in longer-term bond yields and declines in major stock indexes.

Warsh's suggestion that the Fed might have "more work to do" to fight inflation suddenly put a September interest-rate increase in play. Interest-rate futures showed traders now see a roughly 58% chance that the Fed will raise rates at its next meeting, up from 35% on Thursday, according to CME Group data.

The remarks eased concerns that Warsh might be reluctant to raise interest rates because of pressure from President Trump-a worry that had contributed to a recent rise in longer-term Treasury yields, which play a major role in determining borrowing costs across the economy.

At the same time, the message was so strong that it made some investors worry that Warsh had put the Fed in a difficult position where it now could face pressure to raise rates next month whether the economy demands it or not.

"You've essentially signaled to the market that the Fed more or less will deliver rate hikes," said George Catrambone, head of fixed income Americas at DWS. "I'm just not sure that as the data comes in, that's going to be the case."

Investors were hardly panicked by Warsh's remarks, which were delivered at the Kansas City Fed's annual symposium in Jackson Hole, Wyo. The Dow Jones Industrial Average fell less than 0.1%, the S&P 500 declined 0.2% while the Nasdaq Composite dropped 0.5%.

Earlier Friday, Asian equities were mixed, as markets awaited clarity on the Federal Reserve's interest-rate trajectory.

South Korea's Kospi snapped a three-session winning streak, falling 1.8%.

China's Shanghai Composite Index slipped 0.1% while the Shenzhen Composite Index ended 0.4% lower. The tech-focused ChiNext Price Index dropped 1.4%. Hong Kong's Hang Seng Index, however, edged 0.1% higher.

Japan's Nikkei Stock Average rose 0.4%, led by gains in IT service and videogame stocks.

Stocks in Australia rose, as the S&P/ASX 200 gained 0.6%. New Zealand's S &P/NZX 50 fell 0.8%.

COMMODITIES

Crude futures posted weekly losses as the market expected tighter U.S. sanctions against Iran to lead to negotiations rather than military escalations, while Iran and Oman worked on an agreement to open a corridor through the Strait of Hormuz.

Stronger Saudi oil loadings and Iraq's offer to transfer crude outside the Persian Gulf "suggest regional producers are finding ways to move more supply without relying on normal passage through the strait," Gelber & Associates said.

With U.S.-Iran negotiations stalled, "the decline reflects growing confidence in those alternative routes rather than a genuine normalization of Gulf flows."

WTI settled down 0.2% at $83.40 for a 4.2% weekly decline. October Brent slipped 0.4% to $89.31 a barrel, and down 5.4% on the week.

Gold futures settled lower after Fed Chairman Kevin Warsh expressed concerns about underlying inflation, prompting shorter-term Treasury yields to rise.

The fundamental environment remains supportive for gold, "although the market has become increasingly sensitive to expectations surrounding U.S. monetary policy," XS.com senior market analyst Rania Gule said.

"The key question for investors and traders is not whether gold has pulled back, but whether this decline marks the beginning of a deeper bearish reversal or simply a temporary pause before the uptrend resumes."

Front month gold settled down 2.9% at $4,478.10 a troy ounce. Silver fell 3.5% to $66.995 a troy ounce.

TODAY'S TOP HEADLINES

Warsh Says the Fed May Not Be Done Fighting Inflation

JACKSON HOLE, Wyo.- Federal Reserve Chairman Kevin Warsh signaled the central bank may not be done fighting inflation with higher interest rates.

The remarks were his most substantive since he took over this spring, and investors took them as a sign the Fed is more likely to raise rates. Warsh said he saw little sign that borrowing and lending conditions were restraining the economy, and that better inflation readings this summer hadn't convinced him the underlying trend was improving.

"We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do," he said Friday in his first speech as Fed chairman, a highly anticipated debut at the Kansas City Fed's annual symposium in Wyoming.

The U.S. Created 79,000 Fewer Jobs Than Previously Reported, New Revisions Suggest

The pace of job growth was probably slightly weaker than reported from early 2025 through early this year, the Labor Department's Bureau of Labor Statistics said Friday.

The U.S. likely added 79,000 fewer jobs than previously reported over the 12 months that ended in March, according to the BLS.

The private sector likely had 178,000 fewer jobs in March than the still-official data shows, with the slide concentrated in retail and in wholesale trade. Healthcare and private education, and professional and business services, were among the sectors that also likely had fewer jobs than previously reported.

Week Ahead for FX, Bonds: U.S. Jobs Data in Focus; Bank of Canada Decision Due

Below are the most important global events likely to affect FX and bond markets in the week starting August 31.

Focus will turn to U.S. jobs data as investors assess the health of the economy and the likely timing of when the Federal Reserve could raise interest rates.

An interest-rate decision is due in Canada, while in Europe, eurozone inflation data will be in focus.

Japan Spent Record $98.7 Billion to Prop Up Yen in Joint Move With U.S.

TOKYO-Japan spent $98.7 billion to prop up the yen in the past month in a joint action with the U.S., a record intervention that has had a modest impact so far.

The yen has given up many of its initial gains, highlighting the limitations of government efforts to move prices in financial markets. The U.S. has also tried to stem a rise in bond yields, again with limited success.

Data released by the Japanese government Friday confirmed for the first time the historic scale of the operation that started in late July with the backing of Treasury Secretary Scott Bessent. Combined with an earlier defense of the currency in April and May, Japan's total spending on intervention this year has reached around $170 billion, reflecting Tokyo's anxiety after its currency fell to a 40-year low earlier this year.

Chevron, Other U.S. Firms Near Deal to Invest Billions in Venezuelan Oil Fields

Chevron and other U.S. energy companies are nearing deals to invest billions of dollars in Venezuela's oil fields, positioning President Trump for a win after months of slow negotiations.

The U.S. oil major is close to a deal to expand its longstanding operations in the Latin American country, potentially adding two heavy-oil fields to its portfolio in Venezuela, according to people familiar with the matter. It currently has three joint ventures with PdVSA and is the only big U.S. company active in the country.

Halliburton, one of the largest U.S. oil-field-services firms, is also in talks to bring its suite of equipment to oil producers in Venezuela, some of the people said.

Gap Is Back. Investors Are Starting to Believe.

Gap has been building momentum for years. Now, investors are starting to believe in its turnaround.

The retailer's shares soared Friday after the company said sales at its namesake Gap brand, excluding newly opened or closed stores, rose 10% in the most recent quarter. Earnings beat analyst estimates and the company raised its earnings estimates slightly for the year.

The brand that set American style for much of the '90s and early 2000s is undergoing a renaissance. Product collaborations with celebrities such as Victoria Beckham and Hailey Bieber have fueled excitement, and designs by Zac Posen, the company's creative director, have appeared at the Met Gala, the Oscars and other red-carpet events in recent years.

Expected Major Events for Monday 01:00/NZ: Aug ANZ Business Outlook

01:00/JPN: Jul Steel Imports & Exports Statistics

01:00/AUS: Aug Melbourne Institute Monthly Inflation Gauge

01:30/AUS: Jul Financial Aggregates, incl Private Sector Credit

01:30/CHN: Aug CFLP China Manufacturing Purchasing Managers' Index (PMI)

01:30/CHN: Aug CFLP China Non-Manufacturing Purchasing Managers' Index (PMI)

01:30/AUS: 2Q Business Indicators

02:00/SIN: Jul Money Supply

02:00/SIN: Jul Bank Loans

04:30/JPN: Jul Preliminary Report on Petroleum Statistics

05:00/JPN: Jul Housing Starts

05:00/JPN: Jul Construction Orders

06:30/AUS: Jul International Reserves & Foreign Currency Liquidity

08:15/HK: Jul Money Supply

08:30/HK: Jul Retail Sales

09:59/HK: Jul Tourism figures

23:00/AUS: Aug Australia Manufacturing PMI

23:50/JPN: 2Q Quarterly Financial Statements Statistics of Corporations

00:00/SKA: Aug Trade data

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