Global markets caught a break overnight. Asian stocks rallied, Treasury yields eased and the dollar was on track for a weekly drop of about 0.7%, as traders pared bets on a Federal Reserve rate hike hours before the government’s August jobs report.

The moves trace back to Thursday, when Fed Governor Christopher Waller said he could support leaving interest rates unchanged at this month’s meeting if inflation keeps cooling. Futures tied to the Fed’s September 15-16 decision quickly scaled back the odds of a hike to roughly 50%, down from about 63% a day earlier, according to CME’s FedWatch tool. New York Fed President John Williams had struck a similarly cautious tone on Wednesday, telling CNBC that “there’s no clear signs right now whether monetary policy currently is sufficient” to bring inflation back to target.

Why Asian Markets Rallied Overnight

The relief carried into Friday’s Asian session. Japan’s Nikkei 225 closed up 1.3% at 65,020.94, Hong Kong’s Hang Seng gained 1.7% to 25,650.87, and South Korea’s Kospi rose more than 1%. China’s Shanghai Composite was the outlier, slipping 0.3% to 3,930.12. MSCI’s broadest index of Asia-Pacific shares outside Japan rose about 1%, though it remains down for the week.

Wall Street had already set the tone Thursday: the Dow and Nasdaq both closed up more than 1%, with the Dow finishing at 53,686.11. That rally followed a rough stretch in which a global bond selloff — driven by Fed Chair Kevin Warsh’s hawkish tone at Jackson Hole — had pushed long-dated yields to multi-year highs.

Bonds, the Dollar and Gold React

Treasuries firmed on Waller’s remarks, with the yield curve bull-steepening as short-dated debt led gains. The 2-year Treasury yield held near 4.34%, off a 20-month peak above 4.41% touched earlier this week, while the 10-year yield sat little changed at roughly 4.76%.

The dollar index slipped to about 98.96-99.00, on track for a weekly drop of roughly 0.7%. The yen was the biggest beneficiary, strengthening to around 155.7-156.2 per dollar on growing bets that the Bank of Japan will raise rates this month — markets now imply as much as a 75% chance of a September move. Gold held near $4,470 an ounce after rallying about 2% overnight, essentially flat for the week.

Oil eased slightly from six-week highs, with Brent crude around $95 a barrel and West Texas Intermediate near $91, though both benchmarks remain up sharply this week on ongoing US-Iran tensions around the Strait of Hormuz.

What Wall Street Expects From the August Jobs Report

None of Thursday’s moves resolve the bigger question. The Bureau of Labor Statistics publishes the August employment situation report at 8:30 a.m. ET Friday, with Wall Street consensus centered on a gain of roughly 53,000 to 56,000 nonfarm payrolls and an unemployment rate holding at 4.1%.

That would mark a rebound from July, when payrolls unexpectedly fell by 23,000 — one of the weakest readings since the pandemic — and revisions cut a combined 103,000 jobs from the May and June counts. That miss is what first pushed the odds of a September hike sharply lower before Warsh’s Jackson Hole speech reversed the move; our earlier look at how badly the summer payroll figures missed forecasts traced the start of that pattern back to June. For a full breakdown of Thursday’s private-payrolls and jobless-claims data feeding into today’s number, see our preview of today’s report.

Waller himself has already flagged the next tripwire: an inflation report due September 11. “My decision on the appropriate stance of policy will be heavily influenced by what we learn about August inflation,” he said Thursday. “If there is continued progress toward our 2% goal, then I am willing to support holding the policy rate at its current level. But if inflation comes in hot, I would consider a rate hike.”

Europe Splits at the Open, Volkswagen Jumps

European trading opened mixed, with London’s FTSE 100 edging up about 0.1% while Frankfurt and Paris opened lower as investors braced for the US data. The session’s biggest single-stock mover was Volkswagen, which jumped as much as 9.7% after its supervisory board approved a sweeping restructuring plan that will cut 50,000 jobs and review four plants for closure by 2030 — a reminder that the jobs report is not the only labor-market story moving markets today. Our recent rundown of premarket movers around the chip-stock rally tracked a similar pattern of single names driving index-level swings.

What to Watch for the Open

  • 8:30 a.m. ET: August nonfarm payrolls, consensus 53,000-56,000; unemployment rate, consensus 4.1%.
  • FedWatch odds: currently near 50% for a September hike, down from 63% Wednesday — a big beat or miss on payrolls could swing that number sharply in either direction within minutes of the release.
  • The 10-year yield: a hot print that pushes yields back above 4.80% would pressure rate-sensitive equities; a soft one would validate Thursday’s rally.
  • The dollar and yen: further dollar weakness would extend the yen’s best week in a month, with the Bank of Japan’s own meeting later this month now in view.
  • September 11: the August inflation report Waller says will guide his final call ahead of the September 15-16 Fed meeting.

Friday’s 8:30 a.m. number is the one Wall Street has been waiting all week to see.

Sources: Bureau of Labor Statistics, Employment Situation release schedule, August 2026. Federal Reserve Governor Christopher Waller, remarks at a Reuters NEXT Newsmaker event, September 3, 2026. CME Group, FedWatch Tool, September 4, 2026. Reuters, “Asian shares climb ahead of US jobs data, Fed’s Waller soothes bonds,” September 4, 2026. AFP, “Asian stocks rally as traders pare rate bets ahead of jobs data,” September 4, 2026. CNBC, “August 2026 jobs report: Payrolls projected up 53,000,” September 3, 2026. CNBC, interview with New York Fed President John Williams, September 2, 2026. Investing.com/Reuters, “Volkswagen shares rally after board approves radical restructuring plan,” September 4, 2026.