Waller Sparks Market Rally as He Hints at September Pause: Sept. 3, 2026 — 2026-09-03
What moved & why: Dovish commentary from Fed Governor Christopher Waller, NY Fed President John Williams, and Treasury Secretary Scott Bessent on softening inflation and rate cuts (once Middle East conflict resolves and oil cheapens) drove a broad risk-on rally for the second consecutive session.
Cross-asset:
- Equities: 10 of 11 sectors and all subsectors advanced; all four major domestic benchmarks climbed meaningfully.
- Treasuries: Notable gains with bull-steepening across the curve; leadership from shorter, rate-sensitive tenors.
- Dollar: Depreciating amid dovish sentiment.
- Commodities: Precious metals, copper, lumber, and energy soaring on lower yields, weaker dollar, and geopolitical tensions.
- Crypto: Bitcoin surging alongside commodities.
- Volatility: VIX-like protection instruments sold off; prediction markets bid higher.
Econ / Fed angle: Initial jobless claims rose slightly to 206k (vs. 204k prior, 205k expected); continuing claims at 1.779M. Challenger job cuts jumped 58% m/m to 51.9k but fell 38% y/y. Torres expects a fifth consecutive month of weaker payrolls to reinforce dovish case. Fed probability of a September 16 rate hike has fallen to "coin-flip" odds. Inflation data next week remains pivotal, but deteriorating labor conditions should push the Fed to balance its mandate beyond price pressures alone.
Watch next: September 16 FOMC decision; inflation statistics due next week; ongoing Middle East geopolitical developments and oil price trajectory.