This was a week that tested everybody's nerve. It started with the hangover from Warsh's Jackson Hole speech on Friday the 29th, where the Fed chair doubled down on 2% inflation and told markets to stop waiting for a dovish turn. Then Iran and the US started shooting at each other again. Oil ripped 10%. Bonds sold off to multi-year highs. And just when it felt like the floor was falling out, Waller walked up to a microphone on Thursday and said he'd support holding rates if inflation cooled. The whole thing whipsawed.

Monday opened ugly. US strikes on Iran's Larak Island over the weekend had oil surging 5% before the open. Brent hit $90.43, WTI $85.95. The S&P dropped 0.33%. The Dow lost 0.7%. Tim Cook walked out of Apple for the last time, handing the keys to John Ternus. PG&E collapsed 20% after a wildfire liability ruling. The ten-year yield pushed to 4.757% and kept climbing.

Tuesday was worse. The US struck IRGC targets directly. Two tankers got hit in the Strait of Hormuz. Oil went vertical. WTI surged 5.9% to $90.82. Brent jumped 7.9% to $95.36. The S&P fell another 0.71%. The chip index (SOX) dropped 2.1%. Japan's ten-year yield hit 3% for the first time since 1996. Gold, weirdly, fell 2.4% to $4,330, which tells you the move was about margin calls, not safe havens. September rate hike odds spiked to 68%.

Wednesday gave everyone a chance to breathe. Dell reported a monster quarter, raised guidance, and revealed a $95 billion AI server backlog. The stock jumped 16%. Nvidia gained 3.2% on reports it was in talks to buy Hugging Face for $13 billion. The yen jumped 1.2% on BOJ hike speculation. ADP printed just 38,000 jobs, which is terrible, but terrible in a way that made traders think the Fed might pause. HSBC put out a note forecasting back-to-back RBA rate rises. Australian GDP came in at 0.3%.

Thursday was the relief rally. Waller said he'd back holding rates if inflation cools. That was enough. September hike odds dropped from 68% to about 50%. The S&P ripped 1.1%. Nasdaq 1.4%. Bitcoin surged 5% back above $80,000. Gold bounced 2.3% to $4,488. The yen charged 2% higher to 155.74 against the dollar. Nvidia confirmed the Hugging Face deal at $13 billion. OpenAI released GPT-6 Astra. The dollar index fell 0.8%. For one day, everything felt better.

The final weekly numbers lie. The S&P ended up half a percent, which sounds calm. But this index was down over 1% by Tuesday afternoon, with two separate military escalations in the Persian Gulf and oil trading like it was 2008. Bond yields were spiking. The yen was cratering then surging. Gold went from $4,600 to $4,330 and back to $4,488 inside four sessions. Then Waller opened his mouth on Thursday and everything reversed.

Overseas, the damage was real. Japan's bond market is cracking. The ten-year hit 3% for the first time in three decades. The BOJ is clearly going to hike again, and Japanese institutional money is starting to come home. That's a problem for US Treasuries, because Japan has been one of the biggest buyers for years. Europe got smacked by the oil spike, with UK gilts hitting their highest yields since 2007. The Nikkei sold off on the yen strength. Small caps in the US went backwards. The only thing that worked was large-cap US tech, and even that needed a last-minute Waller rescue.

Oil was the week's main character, and for all the wrong reasons. WTI went from around $83 on Friday to $91.72 by Thursday's close. Brent hit $95.81. That's a 10%+ move in four sessions, driven entirely by missiles and tankers. The US struck IRGC targets on Tuesday. Two tankers were hit in the Strait of Hormuz. The last time Hormuz was this hot was early July, and back then oil spiked before settling down once things quietened. This time feels different because both sides are hitting harder.

Gold had a bizarre week. Started above $4,600 from last week's momentum. Dropped to $4,330 on Tuesday as margin calls from the bond sell-off forced liquidation across precious metals. Then bounced 2.3% on Thursday to $4,488 as Waller calmed the room and the dollar weakened. The weekly number shows gold down, but that hides a $270 intra-week swing. Not a market for the faint-hearted.

Bitcoin crossed $80,000 on Thursday for the first time since Nvidia's earnings night last week. The 5% daily move came on the back of Waller's dovish signal and broad risk-on sentiment. Microsoft revealed Azure quarterly sales of $29.4 billion during the week, which kept the AI infrastructure spend thesis alive. Every data centre dollar is indirect support for both crypto mining and the energy complex.

The VIX ended Thursday at 14.32, down nearly 6%, which looks reassuring until you remember it was north of 18 on Tuesday afternoon. The index spent half the week reflecting genuine fear and half reflecting Waller-induced relief. Neither number tells you what happens next week.

The real risk matrix right now has three items on it, and they're all connected. First, Hormuz. Two tankers hit. IRGC targets struck. Iran retaliated by hitting US bases in Kuwait on Thursday night. This isn't calming down. If shipping insurance premiums for Hormuz transit spike again, you get another leg up in oil, which feeds directly into the second risk: inflation. WTI at $91 and Brent at $95 makes every inflation model worse. The Fed can't cut with oil at these levels, and might have to hike.

Third, the labour market is softening faster than the headlines suggest. ADP at 38,000 is a number that belongs in a recession, not a growing economy. JOLTS at 7.271 million is trending down. Friday's NFP print is the most important data point of the month. If it comes in weak, the Fed has cover to hold. If it comes in hot, September hike odds go straight back to 65%+ and the bond rout resumes.

The ASX had its own problems this week, mostly self-inflicted. BHP, Coles, and Woodside all went ex-dividend, which mechanically dragged the index lower. Then HSBC dropped a note calling for back-to-back RBA rate rises, which is the kind of call that makes every REIT and rate-sensitive stock reach for the sick bucket. Australian ten-year yields hit 15-year highs.

GDP came in at 0.3% for the quarter. The economy is limping along. Mining is doing the heavy lifting as always, and the consumer is barely there. The RBA's own minutes from last week showed board members openly talking about hiking again, which makes HSBC's call less outrageous than it sounded at first. If the September quarter CPI comes in hot, they'll pull the trigger.

The ASX is caught between two forces. Mining and energy are doing well because commodity prices are elevated, and the AI infrastructure build-out is keeping data centre names bid. But the rate-sensitive half of the market, REITs, builders, discretionary retail, is getting hammered by the bond sell-off and the prospect of more RBA tightening. HSBC's back-to-back hike call spooked a market that was already on edge. If it happens, the housing market takes another leg down and consumer stocks get worse before they get better.

NFP is everything right now. Waller handed the market a lifeline on Thursday, but it's conditional. He said he'd support holding if inflation cooperates. The labour market has to show it's cooling for the doves to have any leverage. If Friday's payrolls come in above 200K with strong wage growth, Waller's comments become irrelevant and the hawks retake the narrative. If it's soft, like the ADP number suggested, you'll see bond yields drop, the dollar weaken further, and risk assets rally into the CPI print on the 10th. Either way, next week is going to be volatile. September always is. This September, there are missiles in the Gulf to go with it.