Payrolls came in at three times the forecast. Gold gave back $63 and stayed above $4,400.

Daily Take

August payrolls printed 162,000 on Friday morning, against a consensus of 53,000 to 58,000, with unemployment steady at 4.1 percent and both prior months revised up. The market read it the way a hot number gets read in a hiking cycle. Our settlement-based estimate of a September rate hike rose to about 62 percent from 51 on Friday's settlement, undoing in one session the two days of softening that a weak private-payrolls estimate had started. The dollar index rose to 99.17. The 10-year Treasury yield rose about 3 basis points to 4.79 percent. Stocks slipped. Gold settled 1.4 percent lower at $4,476.60 and silver 1.4 percent lower at $66.75. Every one of those is the same move seen from a different desk: the expected rate path firmed, and what had rallied on its softening gave some back. What Friday cannot say is how much of the give-back came through yields and how much through the currency. They pointed the same way, again. The governor who matters said on Wednesday that inflation is the number he is watching. That puts the August CPI, out next Friday, ahead of the jobs report as the decider.

Oil went the other way. Brent's November contract settled 0.8 percent higher at $96.28, reversing Thursday's small decline, and the December 2027 contract rose faster than the front. Then, on Saturday morning, explosions were heard near Kharg Island, Iran's main oil export terminal. Iran's semi-official Fars agency reported the blasts with no visible smoke and called their origin unknown; a second Iranian outlet claimed the United States had struck an Iranian tanker. Neither government had confirmed or denied anything by the time this issue was written. The blasts landed after Friday's settlement, so they explain none of it. They are the first thing Sunday night's trading will price. One correction to Friday's issue: we described mid-September political talks in Rome as a possible US-Iran signal. The source we opened Friday evening says the delegations are American, Israeli and Lebanese. That was a Lebanon item, and we retract the Iran framing. No source we have opened supports a dated US-Iran diplomatic round.

For paying subscribers below: why Friday's gold give-back counts as a test passed rather than a warning, and the one settlement this week that would change that; how far a 62 percent hike estimate leaves the September decision in Friday's CPI's hands; and the shape of Friday's oil move that cuts against our weak-demand reading of the curve, with the China data on Tuesday that decides whether it was a one-day bounce.