The 2-year Treasury yield settled Friday at 4.377%, up more than four basis points and its highest since January 2025. Forbes put it near 3.50% at the start of this year.
An 88 basis point climb with the policy rate unchanged is not a routine repricing. It explains almost everything else on Friday's screen.
Equities barely acknowledged it. The S&P 500 lost 0.38% to 7,718.60 and the Dow fell 0.51% to 53,414.25.
The Nasdaq Composite dropped only 0.29% to 26,506.99, and the Russell 2000 rose 0.25% to 2,975.65. Small caps gaining on a 19-month high in the front end runs against the usual pattern.
The VIX closed at 14.53, up 1.5%. That leaves equities thinly hedged into a week that settles the September question.
August payrolls rose 162,000 against a Dow Jones consensus of 53,000. Unemployment held at 4.1%, with June and July revised up by a combined 55,000.
September hike odds ran near 70% early in the week, then about 50% by Thursday. Governor Waller's openness to a hold drove that, and Friday's print reversed part of it.
Two round trips on one meeting inside a single week is why the front end, not the indexes, is this morning's reference point.
WTI settled at $91.48, up 0.20% on the day and 9.7% for the week, its strongest weekly gain since mid-July. Brent finished at $92.68.
Four visible commodity vessels crossed the Strait of Hormuz on Thursday against a 10-day average near 15. US refinery utilization reached 98%, its highest since 2018.
That is a supply-side bid under the same CPI print the 2-year is trading on. Higher crude and higher hike odds are reinforcing each other rather than offsetting.
Gold fell 1.39% to $4,476.60, one session after closing at $4,539.90. The dollar index rose about 0.25% to 99.16.
Gold surrendered Thursday's Waller rally in a single session. That is the clearest sign the front end, not Middle East risk, set Friday's direction.
A hot CPI on Friday would make gold hold against a rising real rate and a firmer dollar at once. Hormuz was not enough last week.
There is no US session today. Stock and bond markets are closed for Labor Day with no economic reports scheduled.
The Fed's statistical releases due today move to Tuesday, and the FOMC quiet period runs through September 17.
PPI lands Thursday and CPI Friday, both at 8:30 a.m. ET. The Cleveland Fed's nowcast as of September 4 has August headline CPI at 3.38% year over year and 0.36% month over month.
A print above that hands the September 16 decision to the hawks. A soft core reading gives Waller his case back.
