31 August 2026
Fed Chair Kevin Warsh’s hawkish Jackson Hole speech pushed Treasury yields higher and weighed on technology stocks. Renewed U.S.–Iran tensions lifted oil prices over the weekend, while China’s housing reforms and the U.S.–Venezuela oil deal provided some positive offsets.
S&P 500 fell 0.25% to 7,711.76
Dow Jones fell 0.02% to 53,559.99
Nasdaq fell 0.52% to 26,402.42
U.S. 2-year Treasury yield rose 11.8 bps to 4.348%
U.S. 10-year Treasury yield rose around 4 bps to approximately 4.72%
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News
1. China launches a three-pronged property reform covering homebuyers, project delivery and developer financing
* The maximum term for personal housing loans has been extended from 30 to 40 years.
* Banks will determine the actual mortgage tenure based on the borrower’s age, income and repayment capacity.
* A longer mortgage tenure can lower monthly repayments and ease near-term cash-flow pressure for homebuyers.
* Existing mortgage borrowers facing repayment difficulties may negotiate revised repayment arrangements with their banks.
* China will gradually expand completed-home sales, allowing buyers to inspect properties that are completed or close to completion before purchasing.
* Down payments, mortgage proceeds and other purchase funds will be placed in supervised accounts to reduce misappropriation and unfinished-project risks.
* Regulators will support listed developers through refinancing, mergers and acquisitions, corporate bonds and asset-backed securities.
Impact: The measures should help stabilise buyer confidence and reduce liquidity and delivery risks, benefiting Chinese developers, banks, building-material companies and home-appliance manufacturers.
Positive counterpoint: The package goes beyond stimulating demand by reforming project financing and fund supervision. If properly implemented, China’s property market could gradually shift towards a more sustainable model.
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2. Iran delays reopening the Strait of Hormuz as U.S.–Iran military tensions escalate again
* Iran said it had reached an understanding with Oman on passage arrangements through the Strait of Hormuz, but the agreement has not yet been implemented.
* Tehran insists that the U.S. must first fulfil its obligations, including addressing sanctions and halting military action.
* Iran’s military warned that vessels would not be allowed to pass without prior coordination.
* Before the conflict, around 130 vessels crossed the strait daily; only about 24 reportedly passed through last week.
* The Strait of Hormuz normally carries around 20% of global oil supplies, making it a critical chokepoint for energy markets.
* On Sunday, the U.S. struck Iranian rocket launchers on Larak Island, alleging that the Revolutionary Guard was preparing rockets carrying sea mines.
* Iran subsequently launched missiles at U.S. forces in Jordan and threatened further retaliation, reversing the recent easing in tensions.
Impact: Continued restrictions and renewed conflict could raise oil prices, shipping costs and insurance premiums, increasing the risk of another global inflation shock.
Positive counterpoint: Iran and Oman have already established a framework for managing passage through the strait, suggesting diplomatic channels remain open and partial oil flows could recover if U.S.–Iran coordination resumes.
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3. Warsh delivers a hawkish Jackson Hole debut, reviving expectations of a September rate hike
* Warsh said the Fed must be confident that underlying inflation is moving clearly and sufficiently quickly towards its target; otherwise, it still has “work to do.”
* He emphasised that inflation remains above the Fed’s 2% target and identified price stability as the central bank’s core responsibility.
* Warsh did not explicitly commit to a September rate hike but indicated that further tightening may be necessary if inflation fails to improve quickly.
* Market-implied odds of a September hike rose from around 35% before the speech to approximately 58%.
* Expectations that the Fed could raise rates twice by March 2027 also increased.
* The 2-year Treasury yield jumped 11.8 bps to 4.348%, reflecting a sharp repricing of the near-term policy outlook.
* Warsh remained constructive on business investment and acknowledged that AI could raise productivity and the economy’s long-term growth potential.
Impact: Higher rates and Treasury yields could compress valuations, creating pressure on technology stocks, real estate and highly leveraged companies.
Positive counterpoint: Warsh remains optimistic about business investment, profitability and AI-led productivity. Resilient earnings growth could partially offset the valuation pressure from higher rates.
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4. U.S. and Venezuela agree on a 25-year oil deal targeting output of more than 1.5 million barrels per day
* Trump announced that the U.S., in partnership with private companies, had secured majority control over more than 65 billion barrels of Venezuela’s proven oil reserves.
* Venezuela said the agreement would last 25 years while maintaining national ownership and sovereignty over its natural resources.
* The initial phase will develop 17 strategic oilfields, targeting production of more than 1.5 million barrels per day.
* The broader plan includes developing eight new oil blocks with support from U.S. capital, technology and operational expertise.
* Venezuela currently produces around 1.25 million barrels per day, far below its potential because of years of underinvestment, mismanagement and sanctions.
* Based on an assumed oil price of US$65 per barrel, the agreement could generate approximately US$209 billion in revenue for Venezuela.
* Chevron and other U.S. energy companies are negotiating new exploration and production rights, while the U.S. also plans to use Venezuelan oil to replenish its Strategic Petroleum Reserve.
Impact: The agreement could increase non-Middle Eastern oil supply over the longer term, but infrastructure repairs and investment requirements mean it cannot immediately offset the supply risks surrounding the Strait of Hormuz.
Positive counterpoint: If U.S. companies successfully restore Venezuelan production, the additional supply could lower long-term oil prices and inflation while strengthening U.S. energy security.
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