Hawkish Fed Signals Tightening; Crude Oil Declines as Treasury Yields Shift
Federal Reserve Chair Warsh's hawkish tone moved markets this week, with upcoming rate decisions from the RBNZ and BoC, and the US NFP report on the calendar.
The story
Federal Reserve Chair Kevin Warsh delivered a hawkish speech at the Jackson Hole symposium, reiterating the Fed's commitment to price stability. This signal prompted a sharp rise in short-dated US Treasury yields, with the 2-year Treasury yield jumping roughly 7 basis points on Friday to 4.29%. The 10-year yield ended the week around 4.68%, while the 30-year held near 5.18%. This market reaction indicates expectations for tighter near-term policy, potentially weighing on future growth.
Commodity markets saw notable movements, with crude oil experiencing a significant decline. West Texas Intermediate fell 3.84% to $83.38 a barrel, pressuring the broader energy complex. Gold also retreated, settling around $4,506 an ounce after reaching records earlier in August, as real yields firmed. Geopolitical tensions around the Strait of Hormuz and US-Iran relations have previously influenced energy prices.
Beyond the Fed, other central banks signaled upcoming policy shifts. The European Central Bank is widely anticipated to implement a 25-basis-point rate hike in September, with market pricing showing a 95% probability, driven by elevated inflation in some Eurozone countries. The Bank of Japan is also expected to raise rates as 10-year Japanese government bond yields approach 3%. Additionally, central banks in Korea and the Philippines recently increased their rates.
Energy and metals
Brent Crude and WTI Crude both declined significantly over the week, while Henry Hub Natural Gas and TTF Natural Gas moved higher. Gold saw a weekly decline after strong monthly gains. In FX markets, the USD strengthened against the Russian Ruble and Saudi Riyal, and the South African Rand. The Korean Won saw a slight appreciation against the USD, while the British Pound weakened. Across the Treasury curve, US 10Y Note and US 30Y Bond yields moved lower over the week, with the US 3M T-Bill yield also declining, though the US 5Y Note yield edged higher.
| Instrument | Now | 24h | 7d | MTD | YTD |
|---|---|---|---|---|---|
| Brent Crude | 88.10 USD/bbl | -1.8% | -6.7% | -2.2% | +44.8% |
| WTI Crude | 83.40 USD/bbl | -0.2% | -4.2% | -1.5% | +45.2% |
| TTF Natural Gas | 66.98 EUR/MWh | -1.6% | +1.7% | +13.4% | +137.8% |
| Henry Hub Natural Gas | 2.89 USD/MMBtu | -0.7% | +4.1% | +5.1% | -21.6% |
| Gold | 4,529.90 USD/oz | -1.7% | -2.0% | +11.9% | +4.7% |
Currencies vs the dollar
| Pair | Now | 24h | 7d | YTD |
|---|---|---|---|---|
| USD / CNY | 6.721 | -0.0% | -0.0% | -3.9% |
| USD / JPY | 160.038 | +0.5% | +0.7% | +2.3% |
| EUR / USD | 1.159 | -0.6% | -0.9% | -1.4% |
| USD / ARS | 1,512.250 | +0.0% | +1.0% | +4.2% |
| AUD / USD | 0.716 | -0.4% | -0.1% | +7.0% |
| USD / BRL | 5.205 | +0.9% | +0.2% | -4.9% |
| USD / CAD | 1.390 | +0.4% | +0.8% | +1.5% |
| GBP / USD | 1.353 | -0.5% | -0.9% | +0.5% |
| USD / IDR | 17,685.000 | -0.4% | +0.2% | +5.8% |
| USD / INR | 95.380 | -0.1% | -0.3% | +6.2% |
| USD / KRW | 1,371.500 | -0.6% | -1.0% | -4.6% |
| USD / MXN | 17.028 | +0.4% | +0.5% | -5.3% |
| USD / RUB | 85.785 | -0.1% | +3.6% | +7.9% |
| USD / SAR | 3.754 | +3.1% | +3.0% | +0.2% |
| USD / TRY | 48.230 | +0.5% | +0.4% | +12.3% |
| USD / ZAR | 16.175 | +1.1% | +1.1% | -2.5% |
US Treasury curve
| Maturity | Yield | Week | YTD |
|---|---|---|---|
| US 3M T-Bill | 3.678% | -2bp | +13bp |
| US 5Y Note | 4.396% | +1bp | +67bp |
| US 10Y Note | 4.672% | -2bp | +51bp |
| US 30Y Bond | 5.191% | -5bp | +35bp |
Central banks this week
Federal Reserve. Chair Kevin Warsh delivered a hawkish speech at Jackson Hole.
Signaled the Fed's continued focus on price stability, keeping a September rate hike in play and causing short-dated US Treasury yields to rise.
European Central Bank. Incoming data and communication point to a further rate hike in September.
Markets widely expect a 25-basis-point hike to 2.50% on September 10, with a 95% probability, due to elevated Eurozone inflation.
Bank of Japan. Deputy Governor Himino's speech conveyed a hawkish tone regarding future policy.
Markets anticipate a rate hike as 10-year Japanese government bond yields approach 3%.
Bank of Korea. Hiked rates recently.
Part of a broader trend of tightening policy in Emerging Asia.
Bangko Sentral ng Pilipinas. Hiked rates recently.
Part of a broader trend of tightening policy in Emerging Asia.
National Bank of Hungary. Cut rates by 25 basis points.
A notable easing action within the EEMEA region.
Reserves — who holds what, who is moving
FX reserves — top 15 (excluding gold)
| Country | Reserves USD | As of |
|---|---|---|
| China | $3,424.9B | 2025 |
| Japan | $1,252.6B | 2025 |
| Switzerland | $929.6B | 2025 |
| Euro area | $594.4B | 2025 |
| India | $576.5B | 2025 |
| Saudi Arabia | $459.8B | 2025 |
| Korea, Rep. | $421.9B | 2025 |
| Singapore | $404.9B | 2025 |
| Brazil | $334.3B | 2025 |
| United Arab Emirates | $281.9B | 2025 |
| Thailand | $249.3B | 2025 |
| United States | $243.3B | 2025 |
| Mexico | $239.3B | 2025 |
| Israel | $229.5B | 2025 |
| Poland | $194.5B | 2025 |
Fuel + pump prices
| Fuel | Benchmark / pump | Driver + passthrough |
|---|---|---|
| VLSFO Marine Bunker | Singapore: $692/MT, Rotterdam: $723/MT | Prices saw minor fluctuations across major bunkering hubs. |
| LSMGO Marine Bunker | Singapore: $1318/MT, Rotterdam: $1338/MT | Marine gasoil prices experienced slight movements in key ports. |
| HSFO Marine Bunker | Singapore: $582/MT, Rotterdam: $627/MT | High-sulphur fuel oil benchmarks showed small changes this week. |
| LNG Bunker | Singapore: $1,442/mt, Rotterdam: $1,279/mt | LNG bunker prices surged in major ports due to tightening gas markets and geopolitical tensions. |
What we’ll be watching this week
- Eurozone CPI (August) - Tuesday, September 1
- Australia Q2 GDP - Tuesday/Wednesday, September 1-2
- India Q2 GDP - Tuesday/Wednesday, September 1-2
- RBNZ rate decision - Wednesday, September 2
- Bank of Canada rate decision - Wednesday, September 2
- US Nonfarm Payrolls (NFP) report - Friday, September 4
- Canada employment report (August) - Friday, September 4
Markets, FX, reserves: fmd-data (). Central bank moves + fuel benchmarks + calendar: grounded via Google Search at publish time.