Morning Brief: US‑Iran sees heaviest exchanges of fire since July; below‑consensus ADP cools rate‑hike bets

【Key Snapshot】

· ⚠️ The US and Iran engage in their largest military exchanges since July. Mutual missile strikes caused multiple casualties, reviving war fears and lifting crude oil to fresh recent highs.

· 📊 US August ADP private payrolls printed at 38,000, below consensus 48,000. Cooling labour‑market sentiment dampens rate‑hike expectations, triggering a broad rebound across US equity benchmarks.

· 🏛️ Markets await today’s speech from Waller, his last public remarks ahead of the September FOMC blackout period. His comments will directly shape rate‑path expectations.

【Market Outlook】

Core Events

‑ US‑Iran’s heaviest firefight since July: US forces struck Iran’s southern coast, while Iran fired missiles at US military bases in the region. Mutual missile exchanges inflicted multiple casualties and stoked renewed war concerns. → WTI crude +0.88% at $91.01/bbl; Brent crude +1.04% at $95.63/bbl. The 10‑year Treasury yield hit an intraday peak of 4.818%, highest since November 2023, before pulling back modestly.

‑ Below‑forecast ADP weighs on rate‑hike odds: August ADP private payrolls rose by 38,000 versus 48,000 expected. Gains within education and healthcare were offset by job losses in manufacturing and other sectors. → Dow Jones +0.56% at 53061.89; S&P 500 +0.46% at 7666.63; Nasdaq Composite +0.45% at 26217.83.

Exclusive View

Soft ADP offers near‑term offset to geopolitically‑driven hawkish pricing: cooling jobs data limits Waller’s room for aggressive hawkish rhetoric. Still, crude holding above $91 keeps inflation expectations grinding higher. The 10‑year Treasury hitting 4.818% intraday shows markets are prioritizing energy‑cost pass‑through over softer employment prints.

【Overnight Market Performance】

‑ US Equities: Dow Jones +0.56% at 53061.89; S&P 500 +0.46% at 7666.63; Nasdaq Composite +0.45% at 26217.83.

‑ European Equities: STOXX Europe 600 ‑0.2% at 645.94. DAX ‑0.5%, CAC 40 ‑0.3%, FTSE 100 ‑0.3%.

‑ Fixed Income: 10‑Year US Treasury yield ‑0.2 bps to 4.794%, ending its longest winning streak since March; intraday peak hit 4.818%, the highest since November 2023.

‑ Commodities: WTI crude +0.88% at $91.01/bbl; Brent crude +1.04% at $95.63/bbl. Spot Gold +1.38%; Silver +1.92% at $65.14/oz.

‑ FX: US Dollar Index ‑0.09% at 99.59; EURUSD ‑0.04% at 1.1587; GBPUSD ‑0.23% at 1.3484; USDJPY ‑0.92% at 158.70.

‑ Crypto: Bitcoin trades near $77,300.

【Macro Highlights】

1. ⚠️ US‑Iran wage their largest firefight since July. US forces targeted Iran’s southern coast, Iran retaliated against regional US bases. Mutual missile strikes caused multiple casualties. The US threatened further destructive strikes, amplifying war‑risk anxiety.

Insight: US‑Iran conflict is sliding from limited skirmishes toward large‑scale combat. Geopolitical risk is not yet fully priced into crude. A de‑facto closure of the Strait of Hormuz would open substantial further upside for oil prices.

2. 📊 ADP private payrolls rise 38,000, undershooting estimates. August private‑sector jobs added 38,000 against 48,000 consensus. Hiring gains in education and healthcare were offset by manufacturing‑led job losses. July reading revised up to 46,000.

Insight: Two consecutive softer‑than‑expected ADP prints signal gentle cooling across the labour market. For the September rate decision, labour‑market data acts as a constraint on hawkish policy leanings.

3. 🏛️ Williams: Higher long‑dated yields reflect solid economy, not inflation fears. NY Fed President Williams stated rising long‑term yields stem from robust economic fundamentals, and policymakers are still gathering data for next‑step policy moves. The Beige Book pointed to modest economic expansion, slight employment growth and mild price increases across recent weeks.

Insight: Williams attempted to temper market jitters over surging long‑end yields, attributing moves to fundamentals rather than inflation panic. Market pricing suggests investors remain unconvinced by this narrative.

4. 🇨🇦 Bank of Canada holds rates steady at 2.25%, flags heightened inflation risks. New US tariff measures inject greater uncertainty into domestic growth prospects.

【Corporate News】

1. 💾 Broadcom Q3 net revenue climbs 86% YoY, AI‑related revenue surges 221%. Full‑year AI revenue guidance lifted to $580 billion. The firm laid out a long‑term roadmap targeting $2300 billion AI revenue for FY2028, roughly four times current annual AI sales. Demand for AI networking chips keeps accelerating.

2. 🤖 Jensen Huang at G20: NVIDIA will invest nearly USD 1 trillion across the US this year. Huang framed AI infrastructure as a utility comparable to water and power, arguing every nation must build its own AI capacity. His remarks mark a notable framing for global AI supply‑chain expansion.

【Today’s Key Watchlist】

· 🗣️ Fed Governor Waller speech on inflation outlook. Final major official appearance before September FOMC blackout; will directly shift rate‑hike probability pricing. Hawkish tones would lift hike odds; acknowledgement of labour‑market cooling could offer markets relief.

· 📊 US August ISM Non‑Manufacturing PMI. Services dominate US output. Following soft ADP, service‑sector momentum will shape September rate‑policy trajectories.

· 📊 US Initial Jobless Claims, July Trade Balance, August Challenger Job‑Cut data. Final batch of labour indicators ahead of Friday’s Non‑Farm Payrolls.

· 🇪🇺 Eurozone July PPI; final August services PMI prints for France, Germany, Eurozone and UK. ECB September hike is almost fully priced in.