US economic data revealed that the August ISM manufacturing index was at 48.7, which is lower than the expected 49.0. Meanwhile, construction spending for July remained unchanged at -0.1%. The final S&P Global manufacturing PMI for August was 53.0, slightly below the preliminary figure of 53.3. In Canada, the PMI for August increased to 48.3 from 46.1. President Trump mentioned a Supreme Court challenge related to a tariff decision and talked about changes in Space Command’s location. ECB’s Muller believes it’s sensible to keep rates steady, while the Atlanta Fed’s Q3 GDP tracker fell to 3.0%, down from 3.5%. Goldman Sachs revised its Q3 growth forecast for the US to 1.7%. Gold prices surged by $62, settling at $3538. This movement indicates a breakout after a period of stability since April. The US 10-year Treasury yields rose by 5.6 basis points, reaching 4.97%. The S&P 500 dropped by 48 points to 6412. WTI crude oil fluctuated but ended up $1.63 at $65.64 per barrel. In the equity markets, financial and transport sectors underperformed. Nvidia and Tesla saw declines of 1.8% and 1.4%, respectively. The US dollar showed strength but experienced volatility, especially against the Japanese yen, which had shifts throughout the trading day. Given gold’s recent strong performance, we should consider taking bullish positions to take advantage of this momentum. The move above $3500 indicates the end of the consolidation that began in April and may signal an upward trend. Central bank gold purchases reached a record of over 1,000 metric tons annually in 2022-2023, likely providing strong support for this rally. The weakness in equities, combined with a shrinking manufacturing sector, suggests it’s wise to protect against further declines. The US ISM Manufacturing PMI has stayed below the critical 50-point mark in 12 of the last 18 months, highlighting a persistent industrial slowdown. We may look to buy put options on the S&P 500 or call options on the VIX to safeguard portfolios from a potential market downturn. With 10-year yields approaching 5%, pressures on both stocks and bonds are increasing. This trend reflects the ongoing inflation challenges we have faced since the Federal Reserve signaled a “higher for longer” interest rate policy in 2024. Considering this, taking positions on bond ETFs could be a smart trade. The robust US dollar is acting as a safe-haven asset during this period of uncertainty. The renewed tariff discussions add a layer of political risk, which has historically boosted the dollar against other currencies. We see an opportunity to maintain long positions in the dollar, particularly against the yen, which continues to show significant weakness.

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