■ S&P adds 1.2% weekly, as Fed refrains from announcing rate hike

■ Fed’s jawboning leads markets to price in Dec rate hike

■ Bond yields decline, aiding gold to a 2.08% weekly increase

■ EUR/USD weakens to 1.226 after Fed’s no-hike

■ Oil gains moderate as Algeris deal odds dissolve

September, it seems, is unlikely to be remembered as a month where fundamentals, or even investor sentiment proved as the most dominant for driving markets. Policy guidance, alternatively, is more likely to take that title. This includes of course substantial losses in the market, during the start of the month, amid the Fed’s jaw-boning, aimed at raising expectations ahead of Wednesday’s announcement. Evidently, only to be sent back up as it chose not to actually make that hike.

This week’s gains at the S&P 500 conclude to a 1.2% gain, the DAX adding no less than 3.4% and the Hang Seng rising 1.5%. Comparing to September 1st, alternatively, before the Fed chose to test market response to its guidance, puts the dial at the S&P at a 0.3% loss, the DAX at a 0.3% gain and the Hang Seng at a 3.1% increase.

While the central bank’s choice to lead markets did work this time, it’s uncertain if it will again. Looking forward for the fourth quarter of 2016, markets are now pricing in no less than 55% for a hike by December’s announcement. Three months ago, expectations for September stood much lower than that, at around 32%.

Additional implications

Stocks recovery during the week didn’t come without additional implications. These include some moderation at the U.S. bond yield curve – The U.S. 10 year’s yield, which moves inversely to its price is down close to 10bp Monday to Friday, entering the weekend at 1.62%. As is often the case, lower bond yields also makes gold a more attractive asset, with the price for the metal seeing a USD 27.21 per oz. increase, or 2.08%.

The Dollar itself is also weaker as lower rates mean that lending it will be cheaper. EUR/USD is up 0.64% for the week – also back to beginning-of-month levels, at 1.1226. The USD lost a heftier 1.24% against the JPY, back to 101.02.

In the U.K., meanwhile, The FTSE 100 advanced impressively during the week, with a 3% gain, though Friday saw stocks facing some headwind amid speculation for the timing of the Brexit.

Oil prices also proved volatile. The black gold saw substantial gains towards the end of the weekly session, amid speculation that a deal for a production cut would be reached next week. After peaking to USD 46.55 on Friday, however, prices began tumbling rapidly as Saudi Arabia confirmed no such decision is expected. Oil’s losses further extended during the day, ending at 44.59, as the U.S. rig count increased by another 2, to 416 – a 7 month high.