Global markets are back in motion after a flood of developments rattled investors going into the first week of August.
Stocks, gold, and the dollar all pushed higher on Monday, clawing through a heavy mix of disappointing U.S. jobs data, rising pressure on the Federal Reserve, and yet again, new tariffs out of the Trump White House.
The dollar, which had taken a hit on Friday, found some footing again. That came after the Labor Department reported July’s job growth fell way below expectations, and Donald Trump abruptly fired a senior statistics official.
That double punch sent the greenback tumbling more than 2% against the yen and about 1.5% versus the euro by the end of last week. On Monday, the dollar regained some strength, rising 0.3% to 147.91 yen. Even so, it remained roughly 3 yen below Friday’s intraday peak.
Against the euro, it ticked up slightly as the shared currency fell 0.2% to $1.1561. The dollar also edged up 0.2% to 98.88 on the broader currency index after sliding 1.3% on Friday.
Despite the setback, the dollar had already put in a strong showing in July. It rose 3.4% for the month, marking its first monthly rise of the year and its biggest since April 2022, when it gained 5%.
Bond yields collapse as Fed rate cut bets rise
In the bond market, investors made it clear they’re betting on cuts. The two-year Treasury yield dropped to 3.659%, its lowest in three months. The 10-year yield hovered near a one-month low of 4.2434%.
Traders are now pricing in nearly a 90% chance the Federal Reserve will cut rates in September. Expectations are mounting for two 25 basis-point cuts before year-end, and odds of a third are sitting around 40%.
Japanese bonds didn’t sit out. Yields on the 5-year fell as much as 9 basis points to 0.99%, while the 10-year slid 8.5 basis points to 1.465%. The sharp move came after U.S. Treasuries jumped late Friday.
Investors in Tokyo are now eyeing Tuesday’s 10-year bond auction to see whether demand holds up under this pressure. Just last week, the Japanese 10-year yield had touched levels last seen in 2008. Now it’s retreating fast, dragging global yields with it.
Stocks, equities and gold bounce while traders scan tariff fallout
U.S. stock futures surged early Monday too, even with traders still nervous about a new round of tariffs announced by Trump’s team. The S&P 500 futures added 0.55%, the Nasdaq 100 gained 0.62%, and the Dow Jones futures climbed by 230 points, or 0.53%.
But this came after a brutal week that wiped out prior gains across the board. The S&P 500 dropped 2.4% last week, its worst since late May. The Dow fell 2.9%, the steepest since early April.
The Nasdaq ended 2.2% lower. This week’s small bounce didn’t undo the broader market’s unease over inflation and weakening growth. The fresh tariff wave only made that worse.
In Europe, stocks opened higher but remained shaky. The STOXX 600 rose 0.5% by 08:30 GMT after sinking to a three-month low on Friday. Swiss stocks, however, sank.
The SMI index fell 0.8% as the market reopened after a long weekend. Traders reacted to a U.S. tariff hike on Swiss goods, now sitting at 39%. The ten biggest losers on the STOXX 600 were all from Switzerland.
On the commodities front, gold stayed strong. The metal was trading around $3,357, coiling inside a consolidation triangle near the upper part of its channel. Analysts tracking the chart say the pattern looks like a textbook continuation setup. A breakout above $3,450 could open the door to another surge.
Citi updated its gold forecast on Monday, bumping its three-month target to $3,500 per ounce, up from $3,300. The bank also widened its expected range to $3,300–$3,600. In its client note, the bank explained the adjustment came from expectations that U.S. growth will slow further.
“U.S. growth and tariff-related inflation concerns are set to remain elevated during 2H’25, which alongside a weaker dollar, are set to drive gold moderately higher, to new all-time highs,” Citi wrote.
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