7 September 2026, Monday

US employment growth in August significantly exceeded expectations, pushing up the probability of a September Fed rate hike and Treasury yields. US stocks generally declined last Friday, while US–Iran tensions escalated further over the weekend.

S&P 500 fell 0.4% to 7,718.60

Dow Jones fell 0.5% to 53,414.25

Nasdaq fell 0.3% to 26,506.99

US 2-year Treasury yield rose by approximately 3 basis points to 4.37%

US 10-year Treasury yield rose by approximately 1 basis point to 4.78%

News

1.) Chinese AI companies enter Tmall as token services expand into the consumer market

* Zhipu AI opened its official flagship store on Tmall on 2 September, selling AI subscription packages such as the GLM Coding Plan.

* The product is similar to a ChatGPT Plus subscription but is primarily designed for programmers and AI-powered coding.

* Previously, users had to visit an AI company’s technical platform, register for API access and understand token-based pricing. They can now purchase AI subscriptions through Tmall as easily as topping up mobile data or buying a software membership.

* Searches related to Zhipu AI surged 40-fold from the previous day following the store’s launch, reflecting rapidly growing consumer interest in AI services.

* Other Chinese foundation-model developers, including Kimi, MiniMax and StepFun, are also reportedly discussing plans to open official flagship stores on Tmall.

* Tmall has also launched a Token Recharge Centre, initially offering access to models from Alibaba Cloud, Zhipu AI, Kimi, MiniMax and DeepSeek.

* AI tokens are evolving from a technical resource used mainly by developers into a standardised consumer product that can be purchased and renewed automatically.

* Although the inference cost per token has fallen by 80% since the beginning of the year, stronger model capabilities have driven token usage up by more than 40 times, prompting AI companies to replace unlimited plans with usage quotas and subscription-based pricing.

Market impact: The AI business model is shifting from one-off model sales towards recurring revenue from model usage, subscriptions and completed tasks. This improves revenue visibility but also highlights continued constraints in inference-computing capacity.

Positive factor: Usage is growing faster than costs are declining, suggesting that AI commercialisation is not solely dependent on price reductions. Cloud services, AI chips, memory, networking and data centres should continue to benefit from long-term demand growth.

2.) US August payrolls significantly exceed expectations, lifting September rate-hike probability to around 60%

* US nonfarm payrolls increased by 162,000 in August, far above expectations of approximately 55,000 and representing the second-highest monthly increase this year.

* The unemployment rate remained unchanged at 4.1%, in line with expectations and indicating continued labour-market resilience.

* Employment figures for the previous two months were revised higher by a combined 55,000. Meanwhile, average hourly earnings increased by 0.3% month-on-month and 3.1% year-on-year, indicating that wage growth remained moderate. Together, these figures eased concerns about a rapid weakening of the labour market.

* Following the report, the market-implied probability of a September rate hike increased from approximately 55% to nearly 60%, shifting attention towards this week’s PPI and CPI releases.

Market impact: The strong employment report reduces the probability of a near-term Fed rate cut and increases the possibility of another rate hike.

Positive factor: Strong employment growth alongside moderate wage inflation suggests that the US economy remains resilient. If inflation cools this week, the Fed could still leave interest rates unchanged.

3.) Trump and Vance continue calling for rate cuts as tensions between the administration and the Fed increase

* President Trump again called on the Federal Reserve to lower interest rates following the strong payroll report, arguing that America’s improved credit position should justify lower rates.

* He said high interest rates place the US at an “unfair disadvantage” against other countries while increasing financing costs for the government, businesses and households.

* Trump also suggested that if interest rates are not lowered, the US could stop trading with countries with which it runs trade deficits.

* If this threat translates into actual trade restrictions, it could increase import costs and inflation, disrupt supply chains and weaken corporate earnings—making it even more difficult for the Fed to cut rates. For now, however, the remarks should mainly be viewed as political pressure and a negotiating tool.

* Vice President JD Vance also publicly stated that cutting interest rates would be the “right and responsible” response to the current inflation environment.

* Their position directly conflicts with Fed Chair Kevin Warsh’s recent emphasis on controlling inflation and keeping the possibility of a rate hike open.

* Markets are concerned that continued public pressure from the administration could intensify the debate surrounding the Federal Reserve’s independence.

Market impact: Political demands for rate cuts conflict with economic data supporting tighter monetary policy. As the labour market remains stable, the market’s attention will continue to focus on inflation.

4.) US–Iran conflict escalates to attacks on oil tankers

* Iran launched several ballistic missiles at a US aircraft carrier and destroyer. The US said its vessels successfully avoided the attacks and no American personnel were injured.

* The US subsequently struck three Iranian crude-oil tankers, destroying one and “permanently disabling” the other two.

* The conflict has expanded from attacks on military and energy facilities to the direct disruption of Iran’s oil transportation.

* Risks to shipping and crude-oil supplies through the Strait of Hormuz have increased, with Brent crude briefly reaching US$96.28 per barrel.

* Higher energy prices could raise transportation and production costs, further complicating the US inflation outlook and the Fed’s policy decision.

Market impact: The US–Iran conflict is increasing risks surrounding oil prices, inflation and global supply chains.

Key Dates

* 10 September: US PPI

* 11 September: US CPI

* 16 September: FOMC interest-rate decision

Daily

* US markets: US stock and Treasury markets are closed today for the Labor Day holiday.

* Apple is expected to hold a product launch event on Wednesday, with attention focused on its next-generation hardware and potential foldable-device plans.

* This week’s key technology earnings are Oracle and Adobe, both reporting after Thursday’s market close.