One trading day after Fed Chair Kevin Warsh delivered a more hawkish message at Jackson Hole—sending Treasury yields and the US dollar higher while lifting the probability of a September rate hike back toward 65%—the greenback corrected lower against all of the major currencies. The pullback is a familiar pattern around Jackson Hole speeches, where initial currency moves tied to the annual policy symposium often fade as traders reassess how firmly the chair's rhetoric will translate into action at upcoming FOMC meetings.

The USD fell the most against the CAD (-0.31%) and the EUR (-0.27%). The declines against the JPY (-0.19%) and the CHF (-0.11%) were more modest, while the greenback was little changed versus the GBP, AUD and NZD. For the euro and the pound, the session adds to a stretch of strength against the dollar this year, a backdrop European policymakers have been watching closely given its implications for imported inflation and export competitiveness.

Treasury Secretary Scott Bessent may have given dollar sellers an additional reason to push the greenback lower when he noted that the Federal Reserve traditionally does not raise rates in response to a supply shock. His framing speaks to a long-running debate in monetary policy over whether central banks should look through price pressures driven by supply disruptions—as many did after the pandemic-era shocks—or tighten to keep them from becoming entrenched. The market-implied probability of a September hike was little changed, but his comment could provide Chair Warsh with some justification to delay tightening. However, monetary policy is decided by the full FOMC, and several Fed officials continue to lean toward a rate increase.

Bessent also played down concerns about rising Treasury yields, calling the US bond market the most resilient in the world. He noted that the 10-year yield is near where it was when President Trump took office. He added that if investors were genuinely concerned about US debt, they would be selling Treasuries and buying the bonds of other countries—and that is not what the market is showing. The longer end of the curve has been a focal point for investors as fiscal deficits and heavy issuance keep long-dated yields elevated even as the policy debate centers on the short end.

Despite those comments, US Treasury yields finished higher, led by the longer end of the curve:

• 2-year yield: 4.3478%, down 0.2 basis points
• 5-year yield: 4.5037%, up 2.2 basis points
• 10-year yield: 4.756%, up 3.4 basis points
• 30-year yield: 5.2486%, up 4.1 basis points

In the foreign exchange market:

• EURUSD rose 0.27% to 1.1615
• USDJPY fell 0.19% to 159.74
• GBPUSD rose 0.07% to 1.3544
• USDCHF fell 0.11% to 0.8083
• USDCAD fell 0.31% to 1.3858
• AUDUSD rose 0.07% to 0.7164
• NZDUSD rose 0.07% to 0.5914

The broader US stock indices closed mostly lower, although the final declines could have been worse. The Dow was the weakest performer, led by declines in Amazon (-2.50%), Honeywell (-1.79%) and Sherwin-Williams (-1.73%). The Nasdaq 100 bucked the trend and eked out a small gain.

• Dow Industrial Average fell 374.02 points, or 0.70%, to 53,191.33
• S&P 500 fell 25.60 points, or 0.33%, to 7,686.15
• Nasdaq Composite fell 31.53 points, or 0.12%, to 26,370.89
• Russell 2000 fell 15.92 points, or 0.54%, to 2,956.45
• Nasdaq 100 rose 23.55 points, or 0.08%, to 29,456.97

At the session lows, the Nasdaq Composite was down 152.60 points, while the S&P was lower by 46.69 points. The Nasdaq 100 was down 128.93 points before rebounding to close higher by 23.55 points.

Some notable winners included:

• Roblox rose 7.16% to $41.29
• CrowdStrike rose 5.77% to $231.00
• Tesla rose 5.51% to $367.95
• SanDisk rose 5.50% to $1,566.70
• Strategy rose 4.42% to $132.94

Some notable losers included:

• Celsius fell 4.64% to $31.45
• Lyft fell 4.52% to $16.90
• Wynn Resorts fell 4.18% to $91.28
• Alibaba fell 4.10% to $114.02
• Uber fell 4.02% to $75.65
• Shopify fell 3.62% to $147.37

In other markets, crude oil was the standout as Middle East tensions pushed prices sharply higher. Bessent said oil prices will eventually come down and argued that Operation Outcast will pressure Iran into making a deal. The oil rally is central to the supply-shock debate, since higher energy costs feed through to headline inflation and directly shape the case for or against a September hike. Gold edged lower, while silver and Bitcoin moved higher.

• WTI crude oil rose $2.78, or 3.33%, to $86.18
• Gold fell $6.11, or 0.14%, to $4,447.57
• Silver rose $0.15, or 0.23%, to $66.49
• Bitcoin rose $1,201, or 1.55%, to $78,903

Elsewhere during the session:

• US broader indices closed lower on the day, while the Nasdaq 100 closed marginally higher.
• Trump is set to announce a new drug pricing agreement.
• The Strategic Petroleum Reserve fell by 3.1M barrels to 286.6M barrels.
• Buyers in crude oil had their shot to take price higher from a technical perspective and they missed.
• European shares closed slightly lower, while the UK's FTSE 100 and Italy's FTSE MIB closed higher.
• Treasury Secretary Bessent said oil prices are going to come down and that the US 10-year yield is where it was when President Trump took office.
• Speaking at the G20, Treasury Secretary Bessent said Iran is taking sanctions seriously.
• Trump stated that Iran has no Navy and Air Force.
• The USD was lower against the major currencies; a technical analysis video examined EURUSD, USDJPY and GBPUSD to kickstart the week.

Overall, it was a day marked by a weaker US dollar, higher long-term yields, sharply higher oil prices and modest pressure on US equities. However, the rebound from the stock market's intraday lows took some of the sting out of the declines. The September FOMC meeting now stands as the next scheduled checkpoint where the tension between Warsh's hawkish rhetoric, Bessent's supply-shock argument and rising oil prices will be resolved into an actual policy decision.