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Strong US Hiring Revives Federal Reserve Hike Bets

US nonfarm payrolls increased by 162,000 in August, exceeding the 56,000 consensus estimate, while unemployment remained at 4.1%.[2][8] The US Dollar Index traded around 99.20, Treasury yields rose and traders assigned an approximately 58.3% probability to a Federal Reserve rate increase during the month.[2][8] Japan’s foreign-securities holdings fell by $87.8 billion in August, close to the scale of its recent intervention to support the yen.[3] Authorities spent a monthly record ¥15.4 trillion ($98.6 billion) through Aug. The KOSPI opened 3.34% higher at 6,910.78 as foreign and institutional investors jointly returned to net buying.[7] Samsung Electronics rose 4% and SK hynix gained 6%, helping large-cap semiconductor shares lead the rebound.[7]

The field note

4 sources · 4 items
  1. August payroll growth accelerated from an upwardly revised July increase of 21,000.[2][8]
  2. The policy-sensitive two-year Treasury yield rose 4 basis points to 4.37%, while the 10-year yield climbed near…
  3. The S&P 500 fell 0.4% as stronger employment data shortened the perceived odds against a September rate increas…
Story 012 sources

Strong US Hiring Revives Federal Reserve Hike Bets

US nonfarm payrolls increased by 162,000 in August, exceeding the 56,000 consensus estimate, while unemployment remained at 4.1%.[2][8] The US Dollar Index traded around 99.20, Treasury yields rose and traders assigned an approximately 58.3% probability to a Federal Reserve rate increase during the month.[2][8]

Why it matters

A renewed possibility of tighter US monetary policy raises borrowing costs and supports the dollar, while putting pressure on equities and other rate-sensitive assets.[2][8]

Key insights

  • August payroll growth accelerated from an upwardly revised July increase of 21,000.[2][8]
  • The policy-sensitive two-year Treasury yield rose 4 basis points to 4.37%, while the 10-year yield climbed nearly 2 basis points to about 4.78%.[8]
  • The S&P 500 fell 0.4% as stronger employment data shortened the perceived odds against a September rate increase.[8]
  • US Producer Price Index and Consumer Price Index reports later in the week are the next scheduled data inputs for the Federal Reserve outlook.[2]
Story 021 source

Japan Likely Sold Treasurys to Finance Record Yen Support

Japan’s foreign-securities holdings fell by $87.8 billion in August, close to the scale of its recent intervention to support the yen.[3] Authorities spent a monthly record ¥15.4 trillion ($98.6 billion) through Aug. 26, with part of the operation conducted jointly with the US.[3]

Why it matters

Selling reserve assets can transmit Japan’s currency defense into the US Treasury market, although Tokyo retains substantial reserves and has access to a facility designed to provide dollars without requiring Treasury sales.[3]

Key insights

  • Market participants estimate that roughly 70% of Japan’s foreign reserves are invested in US Treasurys, although the official data does not detail securities or maturities.[3]
  • Japan’s foreign-currency reserves fell by $94.6 billion to $995 billion at the end of August, while foreign-currency deposits declined by $6.9 billion.[3]
  • The Foreign and International Monetary Authorities Repo Facility can provide Japan with up to $60 billion per day without Treasury sales.[3]
Story 031 source

Chip Stocks Drive a 3% KOSPI Rebound

The KOSPI opened 3.34% higher at 6,910.78 as foreign and institutional investors jointly returned to net buying.[7] Samsung Electronics rose 4% and SK hynix gained 6%, helping large-cap semiconductor shares lead the rebound.[7]

Why it matters

The rally tests whether selling pressure in Korean chip stocks has been exhausted or whether the move is only a technical rebound ahead of fresh evidence on AI demand, inflation and interest rates.[7]

Key insights

  • Foreign investors bought a net 441.6 billion won and institutions purchased 326.8 billion won, for combined buying of 768.4 billion won.[7]
  • Retail investors sold a net 812.2 billion won as institutional and foreign demand lifted the index.[7]
  • Oracle’s forthcoming results will be assessed for the conversion of AI-related obligations into revenue, capital spending, funding plans and free cash flow.[7]
  • The US August Consumer Price Index is another scheduled test for interest-rate expectations and risk appetite.[7]

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