Asian stocks rise as Fed's Waller eases rate hike fears ahead of US jobs data

Asian stocks and global bonds rallied after Federal Reserve Governor Christopher Waller signaled he would support holding interest rates steady at the September 15-16 meeting if upcoming inflation data shows continued progress. Waller's comments lowered the market-implied probability of a September rate hike to 50%, down from 63%. The resulting dollar weakness turbocharged a weekly rally in the Japanese yen to 155.7 per dollar, while investors braced for crucial U.S. August jobs data.

Fed Governor Waller dovish remarks

• ▪Federal Reserve Governor Christopher Waller stated on September 3, 2026, that he would consider a September rate hike if the August inflation data comes in hot.
• ▪Federal Reserve Governor Christopher Waller stated on September 3, 2026, that he would support holding the policy rate steady at the September 2026 meeting if upcoming August inflation data shows continued progress.

September rate decision uncertainty

• ▪U.S. Vice President JD Vance stated on September 3, 2026, that the Trump administration believes the Federal Reserve should be lowering interest rates rather than raising or holding them.
• ▪Federal Reserve Chair Kevin Warsh stated in late August 2026 at the Jackson Hole economic symposium that inflation had not shown sufficient improvement and the central bank might have more work to do.
• ▪Following Federal Reserve Governor Christopher Waller's remarks on September 3, 2026, futures markets lowered the implied probability of a September rate hike to 50%, down from approximately 63% the previous day.
• ▪The U.S. government is scheduled to release the August consumer price index inflation figures on September 11, 2026, ahead of the Federal Reserve's policy meeting on September 15-16, 2026.

Global equity market rally

• ▪The S&P 500 index rose 1.1%, the Dow Jones Industrial Average gained 1.2%, and the Nasdaq composite closed 1.4% higher on September 3, 2026, led by a rally in technology and communication services stocks.
• ▪Japan's Nikkei index gained 0.8% on September 4, 2026, to close out a week where the index fell 2.7% overall.
• ▪MSCI's broadest index of Asia-Pacific shares outside Japan rose 1% on September 4, 2026, tracking overnight gains on Wall Street, though it remained down 0.4% for the week.

Japanese yen strength

• ▪The Japanese yen strengthened 2.6% during the week of August 31 to September 4, 2026, trading at 155.7 per dollar on September 4, 2026.
• ▪Financial markets on September 4, 2026, priced in a 75% probability of a Bank of Japan interest rate hike in September 2026, with a hike fully priced in by October 2026.

Upcoming US jobs data

• ▪Traders are awaiting the U.S. non-farm payrolls report for August, scheduled for release on September 4, 2026, with economists forecasting a rise of 56,000 jobs and the unemployment rate holding steady at 4.1%.
• ▪U.S. economic data released on September 3, 2026, showed the ISM Services PMI rose to 55.4 in August from 54.1 in July, while the prices paid component accelerated to a three-year high of 72.6.

8 sources