Colin Martin sees the labor market shifting from stabilization to strength, with lower layoffs and steady payrolls. He argues that despite recent yield declines, factors like fiscal concerns, inflation uncertainty, and supply shocks will keep 10-year yields near 4.5%. He expects Fed Chair Warsh to be tight-lipped on forward guidance and focus on productivity and inflation frameworks. He also notes that if wage growth continues to decline, it may not be as inflationary as some fear.

Francine Lacqua reports from Sintra that all eyes are on Fed Chair Warsh, who has been meeting with governors. She notes a faction in the FOMC may push for a hike to show independence, while AI could enable disinflation and cuts next year. ECB officials are uniformly data-dependent and reluctant to give forward guidance, but want markets to keep pricing in a hike to tighten financial conditions. They agree second-round effects from energy prices are not over, even with a potential Middle East ceasefire.

Abir Abu Omar reports that indirect US-Iran talks in Doha were positive, with Iran claiming $12 billion in frozen assets being unlocked and ability to sell oil at a premium. However, the nuclear component remains contentious. Iran has run a container ship aground in the Strait of Hormuz for using an unauthorized route, showing tangible difficulties. Meanwhile, Goldman Sachs and Morgan Stanley warn of an oil glut, with Morgan Stanley estimating $75/barrel average for Q3 and Q4.